Housing starts have fallen 92pc since Q4 2008 – it’s difficult to see how they can go any lower.
Excluding social housing there were 15,398 housing starts in the first quarter, almost the lowest number on record and 14pc less than a year ago, according to figures from the Government (Fomento).
As illustrated by the chart above, housing starts (blue line) hit a floor of below or around 20,000 / month in 2009 and have been bumping along that floor ever since.
Construction completions, which lag housing starts by 18-24 months, have also been falling, down an annualised 52pc in Q1, and 33pc on a quarterly basis, to 30,809.
At some point this year, probably in Q3 or Q4, construction completions will fall below housing starts meaning an insignificant amount of new homes are being built. I believe that could mark an inflection point in this property cycle.
The big news after that will be the first signs of life in the residential construction sector, responding to the inevitable upswing in demand for new homes. It would be nice to be able to report some good news for a change.
How long will it take? Well, according to the latest report by Euroconstruct, residential construction will start growing again next year, by 5pc. Unfortunately, they also forecast another 5pc decline this year, so house builders will have to stay afloat a little longer if they want to catch the next wave (which, by the way, will not be anything like as big as the last one).