In an industry where it takes around 2 years for production output to respond to demand, construction completions are finally falling on an annualised basis. That will take some pressure off the market.
Construction completions fell 30pc to 55,741 in August compared to the same month last year, according to figures from the Ministry of Development. At that level they are even lower than planning approvals, which reached 62,868 in August.
Planning approvals plunged at the start of the crisis over 2 years ago, but thanks to long lead times in the building industry construction completions continued growing into the beginning of this year, aggravating Spain’s glut of newly-built homes.
If the trend continues, the year will end with no more than 84,000 construction completions, the lowest level in a decade. Likewise for planning approvals, which will end the year around 94,000.
I have read articles in the Spanish press interpreting these figures as a sign that the market is starting to digest the glut of new homes. And Elena Salgado, the Minister of Finance, says the glut has stopped growing and will shrink by 20pc in 2001. But by my reckoning the glut will keep growing as long as construction completions are higher than new home sales, which they were by around 30,000 in August alone.
Another dimension that needs to be pointed out is the unequal distribution of the glut. There are too many new homes where nobody wants them and not enough where people do. Soon there will be shortages in some areas, and gluts in others.