14 December 2016 – El País
The construction of new homes is going to continue to increase over the next three years to reach 150,000 units per annum. The activity will centre on Madrid, Málaga, Barcelona, País Vasco and the Balearic Islands, the provinces with the highest residential forecasts going into 2017, according to the annual Trends in the Residential Market in Spain report, compiled by the real estate consultancy firm Knight Frank. Over the next three years, new builds will gain ground to account for 30% of all sales, compared with second-hand homes, which will account for 70%. Currently, just 10% of sales involve new builds and there are only 11 units available for every 1,000 inhabitants. Moreover, the supply of new homes coming onto the market is getting completely absorbed, which means that no new home stock is being generated.
There will also be changes in terms of the type of new homes. Whilst in recent years, homes with three or more bedrooms have been the most demanded, the consultancy firm forecasts that homes with two or fewer bedrooms will start to lead the ranking once again. According to Ernesto Tarazona, Managing Partner for Residential and Land at Knight Frank, “the macro data supports this change in trend. We have fewer inhabitants and yet the number of households is growing. In other words, we have more households with fewer members; in Spain, 25% of households comprise one person and 30% comprise two people”.
Whilst the number of transactions involving second-hand homes is increasing in every autonomous community, the number of operations involving new builds is only growing in those regions with the greatest economic pull: over the last year, new build sales have grown by 40% in Madrid, by 18% in the Balearic Islands, by 5% in Barcelona and by 20% in País Vasco.
In terms of prices, Spain registered a change in trend in 2014 and since then prices have increased by 3% on average. The lack of new developments has meant that new build homes have retained their value and have an average price of €1,750/m2, whilst second-hand homes cost around €1,500/m2. The provinces with the highest average prices (both for new build and second-hand properties) are Guipúzcoa, Vizcaya and Madrid.
The housing stock has been absorbed over the last three years, at an average rate of 20,000 new homes per year. Knight Frank calculates that just 2% of the total housing stock in Spain corresponds to new builds. Nevertheless, approximately 30% will be hard to sell due to location and conditions. (…).
The consultancy points out that the change in trend in the residential sector in Spain is already happening. “All of the segments (supply, demand, land and investment) bottomed out at the end of 2013 and started the road to recovery in 2014. This recovery was very slight in 2014 and 2015, but during 2016, the main indicators have experienced stable growth, and they have potential for improvement. As such, we are facing a new cycle of expansion in the residential sector”.
Original story: El País (by S.L.L.)
Translation: Carmel Drake