Spain has close to 1 million newly built properties languishing on the market in search of a buyer, and almost 50% of them are holiday homes on the coast, claims a recent article in the Spanish financial daily Expansion.
As a result, coastal areas of the Valencian Region, Murcia, and Andalucia have gone from being the stars of the holiday home boom to leaders of Spain’s growing glut of unsold new homes. According to the latest figures there are 46,366 unsold new homes in Alicante province (Costa Blanca), 30,027 in Valencia, 27,279 in Murcia, and 21,902 in Malaga province (Costa del Sol), a total of more than 150,000 unsold new homes, though the true figure could be much higher, claims the article.
Spain’s holiday home sector is going through one of the worst periods ever thanks largely to a collapse in both domestic and foreign demand, argues the article. Rising unemployment has throttled domestic demand, whilst Spain’s deteriorating reputation as a place to invest in property has squashed foreign demand. “Our Achilles heel has been the inexorable rise in prices and the bad image attached to Spain as a residential property investment destination,” says one expert, quoted in the article.
Offering big discounts to stimulate sales isn’t as effective with holiday homes as primary housing, we are informed. A recent property bazaar for second homes on the coast, organised in Madrid by one of the country’s leading estate agents, delivered disappointing results, despite discounts of 20% to 30%. Only 28 sales were made, compared to 184 at a similar bazaar for principal homes in Madrid and other cities.