Despite enjoying more foreign demand than any other Spanish province, Alicante has the “dubious honour” of having the biggest provincial glut of never-sold homes on the market, explains a recent article in the Spanish daily El Mundo.
8 years after the bubble burst, the property market in Alicante province, home to both the North Costa Blanca and South Costa Blanca, is still flooded with homes built during the boom years that have never found a buyer, reports El Mundo. Since 2009, Alicante has had the “dubious honour” of being the province with the biggest glut of never-sold homes weighing down on the market.
In recent years the rhythm of home sales has picked up in Alicante, in large part driven by growing foreign demand, but even this hasn’t been enough to mop up the glut and get Alicante off the top spot in the glut ranking. Alicante is the province where foreign demand is highest, with some 10,953 foreign purchases in 2015, according to data from the Registrars. The glut has fallen by just 15% from its peak of 50,500 in 2010.
The excess new home inventory in Alicante is even higher than much bigger provinces like Madrid and Barcelona, where populations are much larger. According to the latest report from the Confederation of Spanish Associations of Construction Product Manufacturers (Cepco) there were 42,912 never-sold homes on the market in Alicante in Q1 of this year. That compares to 40,724 in Madrid province, and 42,074 in Barcelona province.
Alicante is not the only province in the Valencian Region with an outsized glut dragging down the market. In Castellón province, home to the Costa del Azahar, there are 26,509 never-sold homes still languishing on the market. By Autonomous region, Andalusia has the biggest glut of new homes for sale (95,306), followed by the Valencian Region with 94,083.
Looking at the glut in terms of new homes for sale per 1,000 of population, experts consider that a figure of 1,000 is manageable for the market. In Alicante the figure is 2,329, and a whopping 4,615 in Castellón.
After the Spanish property bubble burst, inland Alicante was “Ground Zero” for the resulting overhang of new homes says in the article, “in contrast with the recovery in new homes on the coast.”
The problem is that most of Alicante’s glut is in the wrong place. Many of the homes started towards the end of the boom had unattractive locations far from the coast, where there is no demand for sale or rental at current prices, perhaps at any price. It doesn’t help that banks own most of the stock, and are hanging onto them with unrealistic prices in the hope that the market picks up. Local developers have recommended demolishing part of the glut to remove its poisonous impact on the market.
There is very little inventory left for sale on the coast, where people want to buy, reports El Mundo, and new development on the coast is growing once again.
There was an interesting comment to the article by a reader explaining why the glut is not selling, whilst new homes built today are finding buyers. “This product is obsolete, which is why it doesn’t sell,” explains a reader with the username of Duplex, who sounds like a property professional. “The new developments we are doing, based on new designs, are selling like hot cakes, both on the coast of Alicante and the Mar Menor [in Murcia]. In fact, there are quite a few areas where new villas sell for more than one million euro. There is a genuine boom going on on the coast, but the buyer today doesn’t want balustrades nor tiles. That’s like trying to sell a model of car with a design from 15 years ago.”