This is a website for buyers, owners, and sellers of property in Spain, offering reliable information and resources to help you get things done with confidence. It is run by Mark Stücklin, author of the Spanish Property Doctor Column in The Sunday Times (2005-2008), and the book ‘Need to Know: Buying Property in Spain’ published by Collins.
Mark Stücklin
Planning approvals in Spain declined by 15% in the Q2, the first double-digit decline since 2013 if you exclude the declines in 2020 caused by the pandemic and lockdown.
There were 20,791 planning approvals (visados) in the second quarter, down 15% on the same time last year, and 20% compared to the pre-covid year of 2019, according to the latest data from the Spanish government (MITMA). Planning approvals fell by double-digits in every month of the second quarter, having risen in every month of the first quarter.
The chart above shows the annualised change in planning approvals each quarter since 2009 with a long period of contraction up to the end of 2013, followed by a period of growth up to the second half of 2019, and a big drop in 2020 thanks to the pandemic. The annualised increase that followed in 2021 was partly due to recovery, but also due to comparison with the distorted picture of 2020.
Looking at regions of most interest to foreign buyers, planning approvals in Q2 fell the most in the Balearics (-39%), the Canaries (-38%), Murcia (-24%), Madrid (-16%), Andalusia (-13%), and Catalonia (-12%), but increased by 17% in the Valencian region.
If you zero in on planning approvals in the second quarter of each year going back to 2008 as illustrated by the next two charts, you see how planning approvals crashed after the real estate bubble burst, then slowly started to recover from 2014 onwards until the pandemic struck in 2020, though never reaching anywhere near the building frenzy of the boom years.
Why the decline?
Why have planning approvals taken a downward turn in Q2 of this year? First of all, the decline could be a one-off, with a return to growth in subsequent quarters so it’s too early to jump to conclusions, though the sustained decline in every month of Q2 doesn’t bode well.
If this is the start of a new period of decline in Spanish housing starts the drivers are likely to include the exploding cost of building materials, rising interest rates pushing up financial risks for developers, and lower overall confidence in the local and global outlook as 2022 unfolds.
