Spain lost 80,000 households over the last 12 months to the economic crisis, which is just another reason why house prices continue to fall.
Household formation is a good indicator of economic health: households multiply in good times, as young adults with jobs start families and buy homes, whilst immigrants flood in looking for work and housing. So when a country loses 80,000 households in a 12-month period, you know something is seriously wrong with the economy.
According to the latest data from the Active Population Survey (EPA), there were 17,391,000 households in Spain at the end of September, 48,900 fewer than the previous quarter, and 80,000 less than the same time last year. That’s the biggest fall in the number of households since the crisis, and records began.
Why are Spanish households disappearing at such a record rate? Because economic migrants who came in the boom years are packing their bags and heading back home, whilst young Spaniards are also having to go abroad in search of work (53% of young adults under 25 can’t find a job in Spain). Spain has gone from immigration to emigration in the last couple of years.
Young adults and families are also having to move back in with their parents to cut costs, which further reduces the number of households.
Fewer households means lower demand for housing in a country with an estimated three million empty homes, at least 700,000 of them newly built. That doesn’t bode well for house prices in the short term.
Needless to say, the only housing market segments with anything to be positive about in the short term are prime coastal areas and city centres, where foreign buyers are creating new demand.