The news from the Spanish housing sector just gets worse. Earlier this week the National Institute of Statistics revealed that the property market shrank by close to 40% in March, and now we learn from the Ministry of Development that planning approvals fell by 60% in the first quarter of the year.
In March alone, planning approvals fell by 72% compared to the previous year, suggesting the fall is accelerating as the year progresses.
There were a record 865,000 planning approvals in 2006, but the number has been falling ever since. They fell by 24% in 2007, but a fall of 60% in the first quarter of this year, in part due to the credit crunch, indicates that Spain’s property slump is picking up speed.
Due to the long lead times in the construction industry, in which houses can take 2 years or more to go from planning approval to completion, a dramatic fall of this scale bodes ill for the construction sector’s prospects over the next few years.