Housing starts over the last 12 months were down 43pc compared to previous 12 months, reveal new figures from the Ministry of Housing. But on a monthly basis housing starts appear to be recovering from a March low.

There were a total of 72,491 housing starts over 12 months to the end of June, a drop of 42.7% compared to the preceding 12 months.

Why is this interesting? Because it shows that residential construction is still contracting at an alarming rate, driving up unemployment and reducing demand for housing (people without jobs can’t afford to buy homes).

Under normal economic circumstances Spain needs between 300,000 and 400,000 new homes a year to replace its ageing house stock and cope with demand driven by changing demographics. This year it looks like Spain is going to build less than 100,000 new homes. This could lead to a shortage of newly-built homes at some point in the not-to-distant future (or at least a shortage of homes where people want them).

Taking just the second quarter, there were 17,878 housing starts in Q2, down an annualised 13.4%, but no change from Q1, which might be the beginning of the bottom for the residential construction industry. Housing starts have been growing since March, as you can see from the chart above.

Looking at construction completions, there were 287,134 over the last 12 months, down 33% on the previous 12 months, and down an annualised 31% in Q2 (but up 4% on Q1).

Refurbishments were up 18% in Q2/Q1, but down 3.4% compared to Q2 2009.