Spanish households might feel poorer after a house price crash that hammered family balance sheets, but on the bright side Spanish housing is now among the most affordable in Europe, according to the latest report on the Spanish housing sector by the international services firm Deloitte.

Housing affordability in Spain, measured as the proportion of household income that families have to spend on financing a home, now stands at 33 per cent, which experts consider a sustainable level that does not put household budgets under strain.

Looked at another way, the average Spanish home now costs the equivalent of 4.4-times the average gross salary, compared to an EU average of 6.1-times, 7.9 in France, and 8.5 in the UK, according to Deloitte, whose real estate desk publishes a report on Spanish housing affordability every year.

Looking at housing affordability by region in Spain, Barcelona and the Basque province of Guipúzcoa have the most expensive housing in relation to incomes, and the provinces of La Rioja, Lérida (Catalonia), Murcia, and Pontevedra (Galicia) the most affordable, with housing affordability ratios below 30 per cent.

In Cádiz province, Andalusia, the problem isn’t so much housing affordability as high unemployment. It’s hard to calculate the cost of housing in relation to incomes when people don’t have jobs. In many parts of Spain, unemployment still stands at more than 25 per cent.

Improving Outlook

Looking forward, the outlook is much better than it was 12 months ago, Deloitte reports. Based on improving macro factors like demography, employment, and population growth, plus property market fundamentals such as housing inventories, prices, and affordability, the Deloitte analysts classify 20 Spanish provinces as on the threshold of a housing market recovery, compared to just eight last year.

The provinces best placed to recover are indicated in green in the map above, whilst the provinces where housing market recoveries are forecast to take the longest are indicated in blue.

With respect to local housing markets, the provinces or regions with the best outlook are Álava, Asturias, the Balearics, Barcelona, Burgos, Cantabria, Guipúzcoa, Guadalajara, Huesca, La Coruña, Lérida, Madrid, Navarre, Palencia, Segovia, Soria, Teruel, Valencia, Valladolid and Vizcaya.

The provinces facing the most serious challenges are Almería, Castellón, Ciudad Real and Toledo.

Housing Glut Map

Deloitte also shed light on the distribution of Spain’s built-but-never-sold housing glut. A big part of the excess housing inventory is located in Madrid, Barcelona, and the ‘Levante’ provinces of the Eastern Mediterranean coast. In the latter case the glut also contains many homes built with holiday-home buyers in mind.

Of the 50 provinces analysed by Deloitte, the biggest excess housing inventory is in Barcelona province (47,466), followed by Alicante’s Costa Blanca (47,022), Madrid (42,81), and Castellón’s Costa Azahar (27,253).

The lowest stock levels are in Cáceres (467), Badajoz (620), and Cantabria (849).

Looking at housing stock levels in relation to population, the biggest problem is in Castellón, with 45 built-but-never-sold homes per thousand inhabitants in, followed by Almeria and Toledo, with 34 each. The lowest stock levels per capita are in Badajoz (0.9), Cáceres (1.1) and Navarre (2.7). The Spanish average is 14 never-sold homes per thousand inhabitants.

Deloitte also reports evidence that housing glut levels are shrinking in 46 out of the 50 provinces they analysed, especially in Badajoz, Cantabria, and Cáceres, down 67 per cent, 66 per cent, and 64 per cent respectively in a year.

[link type=”link-dark” href=”http://www2.deloitte.com/es/es/pages/about-deloitte/articles/Mercado-inmobiliario-residencial.html” target=”_blank”]Deloitte press release (Spanish)[/link]