CBRE: Spain Needs 120,000-140,000 New Homes/Year
14 June 2017 – Observatorio Inmobiliario
The effective demand for housing has intensified and is expected to amount to between 120,000 and 140,00 units per year over the next two years. That is one of the findings of the Spanish Residential Report compiled by CBRE and presented yesterday by Javier Kindelán (pictured above, centre), Vice-President of the company; Samuel Población (pictured above, right), National Director of Residential and Land; and Lola Martínez Brioso (pictured above, left), Director of Research at CBRE España.
The study concludes that the consolidation of growth and the indicators of economic sentiment suggest a new phase of the cycle, where consumption and investment will continue to lead aggregate demand. The outlook and forecasts point to a continuation of the positive trend in the economy for the period 2017-19. The volume of new homes being constructed is well below the level seen in the 1990s. Nevertheless, an intense increase in the number of projects is being seen, which suggests an eventual recovery in the construction of new homes over the next few years, according to Javier Kindelán.
“The current volume of new home construction is insufficient to satisfy a demand of between 120,000 and 140,000 homes per year”, said Lola Martínez Brioso. “There is potential for the construction of new homes, given that the build rates for the next 2 or 3 years are unlikely to meet demand”, explained Samuel Población (…). “The increase in house construction in areas such as Madrid, Barcelona, Valencia, Costa del Sol, the Balearic Islands and País Vasco, is key to containing the inflationary trend in prices”, he added.
And so, at the national level, the recovery in the sector has been reflected in an increase in house building, itself reflected by a 29% increase in the number of housing permits granted in 2016.
Prices will rise by between 4% and 6% on average
The study also highlights that, although the recovery in the residential market in Spain is not generating any significant tensions in terms of house prices at the aggregate level, sharp rises are being seen in the price of new homes in some local markets where demand is high and the supply of new homes is very limited. CBRE forecasts that house prices in Spain will grow during 2017, with increases of between 4% and 6%, taking into account both new and second-hand homes. “In the case of new builds, prices could rise by up to 8% and by 10% in the large capital cities and in areas with lots of demand”, said Samuel Población.
The construction of new homes is currently concentrated in the markets where demand is most solvent, such as the Community of Madrid, which accounts for 23% of the supply of new homes; Alicante, which accounts for 10%, Barcelona (8%), Valencia (5%), the Balearic Islands (3%) and Málaga (2%). These areas alone accounted for 51% of all the new homes that were constructed in Spain in 2016. The pace of property development will continue in 2017 “but the recovery will spread over to include new areas such as Zaragoza, Valencia and Sevilla”, said Población. (…).
Original story: Observatorio Inmobiliario
Translation: Carmel Drake