Property Over Supply

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This topic contains 1 reply, has 2 voices, and was last updated by Profile photo of Anonymous Anonymous 6 years, 9 months ago.

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  • #55462
    Profile photo of Anonymous
    Anonymous
    Participant

    http://www.spanishpropertyinsight.com/buff/2010/03/01/new-figures-tell-tale-of-property-boom-and-bust/#more-4046

    Having just read the above article about housing starts/completion and the projected over-hang, I think the estimate of when this overhang will be consumed is going to be a long time.

    New home formation was estimated around 200,000 in the boom
    Holiday homes 200,000

    Given the ecomomic crisis and housing being many years away from being investments, second/holiday home demand has completely evapourated. New home formation will significantly reduce as immigrants have stopped arriving and many are going home. In fact those leaving are freeing up new housing stock!!

    If you put the figures for demand at

    50,000 (second/holiday homes)
    100,000 (New home formation)

    And 1.5 million unsold homes

    Then 10 years with no other homes built during the meantime.

    Of course if the population does not grow and Spain has the lowest birth rate in Europe, then maybe that new home formation could be zero, since as a new home is formed an old one is lost (New couple verus old couple dying). Maybe this overhang will never be consumed completely!!

    I wonder how this is going to affect Spain recover from this economic crisis.

  • #97383
    Profile photo of Anonymous
    Anonymous
    Participant

    Even without an economic recession, it was obvious that Spain was trying to buck the basic laws of supply and demand. The demand for second homes in Spain was assumed to be virtually infinite but driven by a feeding frenzy fuelled by some less than honest and legal practises which are well documented here and elsewhere.

    I was nearly sucked into this feeding frenzy in 2005 but worked out that there was not enough airport capacity to transport all the “promised” renters in and out of Spain.

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