Standing empty, slowly depreciating, unloved, and unwanted. That seems to be the fate that awaits 4 out of every 5 newly-built properties finished this year, according to an article in the Spanish daily El Mundo, based on the latest housing market statistics.
The problem is that Spain is still building far too many homes. New construction completions may be falling fast compared to last year, down 32% to 107,890 in the first 3 months of the year, but not fast enough to stop Spain’s monumental housing glut from getting even bigger.
El Mundo compared construction completions in the first 3 months of the year with the number of newly-built properties sold during the same period. Whilst 107,890 new homes were finished, according to figures from the Ministry of Housing, just 19,620 new homes were sold, according to figures from Spain’s National Institute of Statistics. That means that, in the first quarter alone, Spain’s excess housing inventory grew by 88,270 homes.
How big is Spain’s new property glut? Nobody knows for sure, but estimates range from 700,000 to more than 1 million new properties. What is for certain is that Spain’s residential construction sector has no hope of recovery until the glut has been dealt with up.
Developer associations forecast that housing starts will fall below 150,000 this year, the lowest figure in decades, and a long way off the 800,000 plus homes started in 2006. In a normal year Spain is said to need between 400,000 and 450,000 new homes, taking into account demographics and immigration. At that rate it would take 3 to 4 years for the market to digest the glut, assuming credit starts to flow again.