Hope For Spain´s Vacant Dwellings

19/08/2014 – Expansion

The amount of empty homes with no view to being sold varies in line to the place but at least their magnitude is generally diminishing. Some areas haunt with ghostly housing developments, while the other have got little stock left to absorb. Cranes returned to some districts, too. Sadly, it is clear that the overall tendency still heads towards the bottom.

The ´Real Estate Heart Rate Monitor´report by the Instituto de Práctica Empresarial (or IPE, a real estate business school from Madrid) forecasts that at the end of 2014 there will be 652.000 unsold houses, by 14,8% less than in 2013 (766.000 units). In other words, 114.000 vacant and finished (ready to market) dwellings owned by developers and banks will find purchasers this year. Since 2010, 290.000 stock homes have been drained in.

The institution´s Real Estate Professor, Jose Antonio Perez, who drew the report, reckons that due to reduction in construction volume and the increase in the new housing sales observed this year ´will continue to drain the stock in specific areas and in accordance with the product type and the target clients.´

´In 2014, new construction will revive in those places where the supply does not meet the demand or the client´s requirements´, explains Perez. ´At the end of the year, prime areas will provide their solvent investors with new products´, we read in the study.

The IPE portends a rise in building permits in the coastal, high-end areas, although still there will be much to sell. The activity will boost the number of new permits from 60.000 issued in 2013 to 63.000 documents said to be granted this year.

Moreover, new homes will appear in the areas where the stock has already been completely absorbed.

Still, huge amounts of unsold dwellings linger in the Valencian Community (164.000 homes) Andalusia (102.500) and Castille-La Mancha (83.700). The three concentrate over a half of the total (53.6%). The least of the stock in excess is found in Extremadura (3.238 units), Navarre (3.854) and the Balearic Islands (7.965).

Catalonia disposes of 12.977 unsold houses, less than a half of what Madrid holds (27.198 units).

There are two ways of shedding the stock, experts say.

Firstly, the hope should be placed in the foreign investors. In 2013, property purchases by non-Spanish residents totaled at 55.187 properties, accounting for 21.4% of all transactions. Experts from the field assure that if Spain wants to approach a solid recovery, it should gamble on this type of buyers.

In fact, second (or holiday) housing sales saw prices much more adjusted than the main dwellings, which is not reflected by official statistics.

Secondly and most importantly, mortgages. Banks timidly started to lend again but it is not enough as the housing needs loans like a desert needs the rain.


Original article: Expansión (by J. M. Lamet)

Translation: AURA REE