Spain’s property market and construction downturn is a “necessary adjustment” after years of excessive growth in the housing sector, according to Beatriz Corredor, Spain’s housing minister.

Speaking yesterday in a radio interview, Corredor said that the downturn was “desirable, necessary, and to be expected” after years of excessive house building. With housing starts in recent years running at more than 700,000 per annum, compared to demand from new households of between 400,000 and 450,000 per year, Spain’s housing overhang has been inflating rapidly.

To help soften the downturn Corredor is trying to stimulate the rental market and encourage the refurbishment of Spain’s existing housing stock. One of the key objectives of her new housing plan is to subsidise one out of every three people who buy or rent a home in this legislature.

To achieve her objectives, Corredor has announced measures to encourage owners to rent their empty properties by giving them stronger legal rights over tenants. However, the housing ministry has ruled out making the standard rental contract shorter than 5 years, so this will remain as a big disincentive for potential landlords.