17 March 2015 – Cinco Días
The region has joined the recovery later due to its poor employment situation.
The autonomous community of Andalucía was undoubtedly one of the hardest hit by the burst of the real estate bubble, due to the weight that holiday homes have traditionally held in the region. Attracted by the influence that the areas of Marbella and the Costa del Sol have had on the rest of the Andalucían coast for decades, Andalucía was no exception and also joined the construction craze and the boom in prices.
In fact, according to figures published by the local Government, led by the socialist Susana Díaz, based on census data compiled by the National Institute for Statistics (INE) and estimates from the Ministry for Development, the total stock of real estate in Andalucía currently amounts to around 4.5 million homes.
If we compare this figure with data from 2001 (population census numbers and housing data are compiled every 10 years), the stock of housing has increased by more than one million homes, which represents a rise of more than 25% in relative terms. This means that, just like in the rest of the country, a significant stock of unsold new homes has accumulated (in Andalucía); some sources estimate (that the stock amounts to) 150,000 properties and others, such as the Spanish Confederation of the Construction Product Manufacturers Association (Cepco) estimated (that the stock amounted to) 114,000 in 2009.
What has happened since then? As in the rest of the country, between 2009 and 2013, construction activity (in Andalucía) virtually ceased, prices experienced the largest slump in recent history and house sales dropped to historical lows, dampened by the poor employment situation and the closure of the credit tap.
In this context, sales did not begin to take off again until price reductions started to decelerate and the flow of financing started to slowly open up; and since then, sales have evolved unevenly in each region.
Six years on and Andalucía is not known for being one of the regions where house sales have grown the most or where cranes have begun to appear again, since it is still weighed down by the employment situation, which has not improved there as it has done in other autonomous regions. And this is the case, regardless of the statistics that we analyse.
If we take the most recent statistics (published last Thursday) as a benchmark, which were prepared by the Ministry of Development using data from notaries, house sales in Andalucía grew by 21% during the last quarter of 2014 with respect to the same period in the previous year. These figures are roughly equivalent to the national average (19.5%), however according to the Ministry of Development, seven regions experienced increases that exceeded those recorded in Andalucía.
Meanwhile, if we consider the statistical figures compiled by INE, which obtains its data from the property registers, then house sales in Andalucía increased by just 0.3% year-on-year in 2014, compared with an average rate of increase across Spain of 2.2%. This modest growth in Andalucía contrasts with the recoveries of 18.5% and 12% in terms of real estate sales experienced in the Balearic and Canary Islands, respectively, two other regions that are heavily influenced by holiday homes and purchases by foreigners. Even so, the surplus of new homes in Andalucía had decreased by 44.5% to amount to 63,250 new homes as of last September, according to Cepco.
And where is Andalucía in terms of prices? Again, it worth considering the two sets of statistics that are regarded as ‘official’: those published by the Ministry of Development and INE. The department led by Ana Pastor recently published its price statistics relating to the entire year 2014 (compiled on the basis of appraisal values) and although they showed that house prices (in Spain) increased by an average of 0.5% on a quarter-by-quarter basis (the last quarter in 2014 compared with the previous three months), on an annual basis (fourth quarter 2014 compared with the same period in 2013), the most recent figure was negative, with house prices decreasing by 0.3% at the end of last year.
Nevertheless, Andalucía recorded positive rates in both cases, although the increases were very modest: 0.4% QoQ and 0.2% YoY. By province, five ended 2014 with lower prices than they had recorded a year before. Meanwhile, according to INE’s data (compiled using figures from notaries), Andalucía closed 2014 with an average annual price increase of 1.8%, just one (basis) point below the highest figures, which were recorded in Madrid and Valencia, with annual increases of 2.9% and 2.8%, respectively.
Industry experts agree that the recovery in the real estate market has started later in Andalucía than in other regions, but consider that now is the moment to take advantage of the ‘pull of tourism’ to construct there once again, since there is demand, and that will generate activity and employment.
Original story: Cinco Días (by Raquel Díaz Guijarro)
Translation: Carmel Drake