The G-14 is a lobby group made up of Spain’s biggest developers, and in the 2 months over December and January they didn’t start one single home between them, reports the Spanish daily El Pais.
That’s right. Spain’s biggest developers, responsible in recent years for some 10% of housing starts nationwide, didn’t start building so much as one piso (flat) between them in 2 months.
The article says there is no reason to think that February was any different. If so, that means basically zero housing starts in 3 months, when not so long ago they would have started more than 10,000 between them. That’s quite a drop in activity. They are supposed to be home builders, and if they aren’t building homes, then what are they doing?
Why the collapse in housing starts? Because sales have imploded and their stock of unsold homes has exploded. By some estimates there are more than a million newly-built homes on the market in search of a buyer.
Developers listed on the Madrid stock exchange have to detail new sales activity in their stock market filings. As a result we know how many new sales contracts they signed in 2008, and how the results compare to the previous year:
Vallehermoso: 281 (-78%)
Parquesol: 54 (-77%)
Metrovacesa: 137 (-85%)
Colonial: 51 (-73%)
Realia: 326 (-29%)
Martinsa-Fadesa: 2,073 (-57%)
Furthermore, of the 2,463 properties finished by Metrovacesa last year, only 657 had a buyer, meaning that Metrovacesa’s stock of unsold homes rose by 1,806 in 2008. It’s a similar story for other developers.
Various construction industry bodies forecast that housing starts will fall below 150,000 in 2009, explains El Pais. That would be a record low in recent memory, and a far cry from the close to 1 million housing starts clocked up in 2006.
When housing starts fall from 1 million to less than 150,000 in 3 years, a lot of construction sector employment gets destroyed in the process. Where will all those construction sector jobs go? It’s difficult to imagine all those brickies retraining as hairdressers or computer programmers, even if the Spanish economy offered more service jobs. Hundreds of thousands of them will soon have no jobs and no unemployment benefits.