An increase in the supply of new homes is not what the doctor ordered for the ailing Spanish property market, but that is exactly what the patient is going to get. The number of new homes finished in 2008 will beat all previous records, adding to the glut of newly built homes already languishing on the market. “The number of new homes this year will hit an all time high, more than in 2007,” said Jose Luis Malo de Molina, the director general of the Bank of Spain, at a recent conference in Valencia.
Benjamín Muñoz, general secretary of the Valencian Region’s developer association, confirmed that supply of new homes is increasing. Speaking to the regional daily ‘Las Provincias’, Muñoz explained that “the real estate sector can’t turn around quickly, it works in the medium and long term, so this year the properties started at the end of 2005 and beginning of 2006 will be completed, which means the number of new properties on the market will hit an all time high.”
But if construction completions are still increasing, the same cannot be said of housing starts, which have collapsed to a forecast of below 200,000 this year (from 600,000 plus). This points towards Spain’s next big problem – rising unemployment. “The cost of the crisis will come in the form of unemployment,” says Muñoz. “You will see what happens all of a sudden to the close to 1 million people currently finishing construction, when the properties now being built are completed in October and November.”