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Real estate business startups bode well for property market

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The growing number of business startups up in the Spanish property sector bodes well for the market, if the past is anything to go by.

Of the close to 95,000 new business startups last year – the highest level since the final boom year of 2008 – the biggest increase came from the property sales and development sector, reveal the latest statistics from the College of Registrars.

As a result, real estate sales and development companies rose from 7.1% to 7.9% of all businesses, increasing by 11% in 2015, whilst agriculture and industry operations declined in relative size.

At the same time, the number of businesses (all sectors) going to the wall fell last year for the second year running.

The relative changes in the fabric of the economy tell us something about where wealth is being created in Spain. Real estate wealth creation is back on the rise as the sector expands, these figures suggest. However, we are still a long way from the unhealthy situation in the boom years, when construction and housing made up 18.5% of Spanish GDP, almost double the European average.

Looking back at the boom years helps to illustrate how data from the mercantile register can be a leading indicator for the housing market. Figures now showing a double-digit growth in the Spanish property industry, were flashing red back in 2005, two years before house prices began to fall, and the bust began in earnest. This time around they might be a sign of better times to come.

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