New home building will ramp up in 2016, having increased 29% this year to the end of October (according to Government data), forecasts the real estate services platform Aliseda, which was set up by the Banco Popular bank.
Demand for primary homes from first time buyers will be between 80,000 and 85,000 next year, whilst families trading up the property ladder will demand 70,00 to 75,000, total around 160,000 new homes.
Looking further out, Aliseda say “We could be talking about a total of 200,000 new homes in construction per year in a short period of time.” That would be a big increase on current levels, but still a long way from the close to 800,000 housing start per year at the height of the boom.
Aliseda forecasts that young families will once again be a key market segment in future, having been excluded from the market during the crisis. “The segment that has had its access to housing most affected in recent years thanks to the economic crisis has been young adults,” explain Aliseda in a recent report. “They are the ones currently showing the most interest in buying a home, and are going to play a key role in the sector in future.”
Aliseda forecast that home sales will grow 15% to 20% next year, thanks to “greater access to mortgage credit.” They expect Spaniards to continue favouring purchase over renting, and that house prices will remain stable next year in general, but continue to fall in provinces with high inventories of homes.
They also expect foreigner buyers to continue playing a key role in the second home market. 65% of holiday home sales during the crisis have involved a foreign buyer.
STUCK IN THE NEST
Not everyone shares Aliseda’s optimism when it comes to first-time buyers. The Emancipation Observatory, run by the Youth Council of Spain (Consejo de la Juventud de España) recently revealed that 80% of young adults under 30 still live with their parents, and to fly the nest would have to earn 98% more than the currently do in order to dedicate 60% of salary on a mortgage to buy a flat of just 50m2.
As far as the Observatory is concerned, young adults are still priced out of the property market, referring to “ the precarious situation of young adults in the job market, and the tough conditions of the housing market, which is inaccessible given the purchasing power of the majority.” 51% of Spaniards under 25 are unemployed, and 30% in the 25 to 29 year bracket.