The supply of unsold homes in Spain will shrink to 563,000 units in 2015, a 40 percent decline from 2010, a new report suggests.
An uptick in sales by foreign buyers and institutional investors is cutting into the supply, according to the latest edition of the Pulsometer real estate report prepared by Spanish Realtors Association, in collaboration with the Institute of Business Practice (IPE) and the National Network of Qualified Property Consultants (RAIC).
“The purchase of non-residents continues to rise, growing at a double-digit figures,” José Antonio Pérez, director of the real estate department of IPE, told reporters.
In some areas, such as the Costa del Sol, foreign buyers account for 90 percent of sales, compared to a 30 percent average nationally, the report says. That activity has effectively cut the supply of available homes for sale in many areas, where there has been no new construction.
In Madrid, the supply will shrink to 12,000 properties in 2015, an 80 percent drop from 2009, a new report says. The report forecasts more than 29,000 sales in Madrid in the next year, a return to 2008 and 2009 levels.
Due to stabilization in prices and “renewed interest from institutional investors,” the researchers anticipate the first signs of new construction in “certain localities” later this year.
Overall, the report from the estate agents offers a boosterish tone, with plenty of “buy now” references. And the overall decline in supply is a bit deceiving. Many of the homes left in supply are half built or poorly constructed in bad locations, with little chance of ever selling.
The report also notes that two-thirds of the deals in many areas are all cash, which the report takes as a positive sign that investors are shifting funds into real estate. But that also demonstrates the exaggerated dependence on foreign buyers, who typically pay in cash, and the overall lack of available financing.
Any decrease in the oversupply of home is certainly welcome news for the property industry. But prices will have to start rising and domestic sales need to pick up before that will translate to a recovery in the market.