23 July 2015 – El País
Spain is still slowly digesting the volume of unsold new homes that was left over following the burst of the housing bubble.
According to the Ministry of Development, the stock of newly constructed homes decreased by 5% last year with respect to 2013, to 535,734. The remnants of the bubble are concentrated in those areas in which developers constructed the most during the boom times, in such a way that the provinces with the highest number of vacant homes are: Castellón, Almería and Toledo. The sector warns that many of these properties, especially those in poor locations, will be very difficult to sell.
The stock of newly built homes peaked in 2009, when the market came to a standstill, large companies in the sector collapsed and assets started to move onto the balance sheets of the financial institutions. That year, the country registered almost 650,000 new homes without a buyer. Since then, the volume of unsold homes has declined at an annual rate of 3.6% per year. “A decline of 5% still represents a tiny amount” says José García Montalvo, professor of Applied Economics at the University of Pompeu Fabra (UPF).
The slow rate of decline is due to two main factors. Firstly, house sales are recovering, but in a very uneven way: whilst sales involving second-hand homes have increased by 42%, according to the National Institute of Statistics (INE), sales of new homes have decreased by 37%. This means that barely 20% of sales related to new homes, whereas between 2008 and 2013, they accounted for half of all sales.
The second reason is that the market has written off some of that housing stock as unsellable. “Some of the stock will never be sold” says García-Montalvo. Moreover, Bankinter’s study service estimates that around 150,000 homes will fall into that category, above all those located in ‘ghost’ towns and neighbourhoods, and in coastal areas where there is little or no demand.
This explains why the provinces with the highest volumes of vacant new homes are located on the Mediterranean Coast and in Castilla La Mancha. In relative terms, the provinces with the most unsold stock are Castellón (6.45% of the total), Almería (5.47%), Toledo (5.39%) and Albacete (4.31%). In Madrid and Barcelona, where the cranes have now returned to start new projects, that proportion stands at 1.4% and 1.7%, respectively. And according to the Ministry of Development, the stock is non-existent in Cantabria and Extremadura. (…).
The stock of empty homes still exceeds 10,000 units in around twenty provinces. In general, the decreases amounted to around 5% on average, except in Málaga (16.4%) and A Coruña (8.3%). At the other extreme, the volume of unsold homes actually increased in Álava, Bizkaia, Ceuta and Melilla, albeit from relatively low levels. (…).
Original story: El País (by Lluís Pellicer)
Translation: Carmel Drake