How bad is the housing glut on the coast?

spanish property glut

Built in the boom but never sold. New homes on the Spanish coast.

A recent study tries to estimate the glut of homes for sale on the coast, where foreigners tend to buy holiday homes.

Anyone thinking of buying or selling a property on the Spanish coast should be interested in knowing how much property there is for sale. The bigger the supply, the more pressure there is on vendors to lower prices.

A recent report by consultants RR de Acuña y Asociados, who publish a yearbook of statistics on the Spanish property market, tries to estimate the inventory of homes for sale in different parts of Spain, including coastal provinces.

According to their estimates, there were 88,000 new homes, 243,000 resales, and a total of 331,000 homes for sale in coastal areas at the end of 2014.

Dividing the stock of homes for sale by annual sales volumes for each province, RR de Acuña arrive at their estimation for stock absorption times, or SAP, (tiempo de disolución de stock TDS), measured in years.

The following legend explains how to interpret each map. Green means between half a year (or less) and one and a half year’s worth of stock, whilst at the other end of the scale, dark red means between six and a half and (more than) ten year’s worth of stock.

rr-acuna-sap-legend

NATIONAL PICTURE

The first map shows the national picture for all types of property (both new and resale), with a national average stock absorptions period of 6 years.

Sales absorption period (in years) all types of property, all Spain (see legend below).

Sales absorption period (in years) all types of property, all Spain (see legend below).

COASTAL PROVINCES

The next map shows the SAP for all types of property in coastal provinces. According to RR de Acuña’s calculations, the glut is biggest in Barcelona province (not city), the Balearics, and Valencia’s Castellon province, home to the Costa del Azahar.

SAP for inventory of all homes on the coast

SAP for inventory of all homes on the coast

NEW HOMES ON THE COAST

Next comes the SAP map for new homes on the coast, showing a glut in the provinces of the north east coast, but relatively low stock levels on the Andalusian coast.

SAP for new home inventory on the coast

SAP for new home inventory on the coast

RESALES ON THE COAST

Last comes the SAP map for the resale home inventory on the coast, showing almost the opposite picture to the new build map, with higher inventories in the south, and lower inventories in the north east.

SAP for resale homes on the coast

SAP for resale homes on the coast

Overall, whichever way you look at it, the inventory of homes for sale in most coastal areas, both new and resale, will take years for the market to digest at current sales volumes. That suggest that, with the exception of some hotspots like Marbella and the new development market on the Costa del Sol, the property market on the coast will be dragged down for years to come by high inventories.

Comments

comments

2 thoughts on “How bad is the housing glut on the coast?”

  1. Campbell Ferguson

    What the study doesn’t take into account is the relative attractiveness of properties. The best and upper secondary properties will sell, with competition at the top level. Other properties have no logic for being and perhaps will never sell, just being left to be vandalised and scavenged.If they are removed from the statistics it’s a much rosier picture all round.

    1. Profile photo of Mark StücklinMark Stücklin Post Author

      True Campbell. That’s why we have both a glut and new building going on at the same time. There’s no market for some of the crap built in the boom. In fact, as a general rule, you are better off buying in a bust than a boom. Risks and prices are lower, quality and bang for your buck higher.

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