324,000 New Homes Still Not Sold 10 Years On

13 July 2017 – La Vanguardia

At the end of this year, a decade after the real estate bubble burst, the number of new homes constructed during the boom that are still left unsold will amount to 324,000, according to a report on the Residential Market in Spain prepared by Servihabitat.

The stock of unsold homes is gradually decreasing: it shrank by 18.6% last year to 394,000 homes and sales are accelerating this year, in such a way that an additional 17.8% decrease is forecast by year end. “There is still stock is the areas where there has not been much demand for housing in recent years”.

But purchases are rising and in the majority of areas, the numbers may reach the technical stock level, typical of a healthy market, within a few years, said Julián Cabanillas, CEO at Servihabitat.

Homes are now being sold at a good rate even in the most depressed areas

The report prepared by the firm indicates that the majority of the unsold homes are concentrated in Castilla y León, Castilla-La Mancha, La Rioja, Cantabria, Murcia and the Comunidad Valenciana. “In some towns in Toledo, with large housing developments, there are four or five times as many homes as there are local inhabitants; there, it is hard to imagine that these homes will be absorbed and it is possible that the developments that were half-finished will have to be demolished”, he acknowledges. According to Cabanillas, the technical stock should amount to around 165,000 homes.

The absorption of new homes is happening in a very heterogeneous way. In Andalucía, where 90,000 homes will be sold this year, there are still 35,000 unsold homes leftover from the boom “which will be absorbed within a couple of years”. By contrast, in the Comunidad Valenciana, where the stock of unsold homes stands at 100,000, sales are forecast to amount to just 60,000 this year, and so the unsold homes will not be absorbed for another 5 or 6 years.

According to Cabanillas, the situation is very different in Cataluña, where less than 10,000 unsold new homes are left, which means that, in his opinion, “the market has already normalised there”. In his view, there are still some “specific and very localised areas of depression”, such as parts of Lleida, the south of Tarragona, Terrassa and Salt. By contrast, the stock in Barcelona “falls below the technical stock level”, which is leading to a lack of housing, new developments and land, which is putting pressure on prices and driving out the local population”. In his opinion, the differences between areas reflect the fact that some areas “are less appealing and that is a structural factor that will continue to exist”.

According to the servicer’s data, the sale of homes will grow by more than 17% in Cataluña this year, to exceed 78,250 units sold, whilst in Spain as a whole, the figure will reach 465,000 operations, representing an increase of 15.2% (…).

Original story: La Vanguardia (by Rosa Salvador)

Translation: Carmel Drake