Unsold Housing Stock to Persist Until 2022

25/06/2014 – Cinco Dias

“Very slow”. This is how Fernando Rodríguez y Rodríguez de Acuña – chairman of RR de Acuña & Asociados – forecasts housing market recovery in Spain, recognizing a turn in tendency observed for the last 6, 7 years.

At the presentation of “The Annual Statistics of the Spanish Real Estate Market 2014” report, Fernando Rodríguez told that the imbalance between supply and demand produced since 2007 will re-establish at much slower pace than some companies claim. In fact, the firm´s chairman accused the recent, optimistic data of distorting the reality in the sector.

Thus, the director maintains the housing values will continue their free fall by 5 to 7 percent more annually in the years 2014-2016 due to the abundant supply and weak demand. He estimates the unsold stock represents 1.7 million units. 23% of them (400.000) belongs to banks. In his opinion, the only way towards absorption leads through cuts in prices.

What is more, Rodríguez points out that the demand will return “leisurely” for average salaries and job precariousness. He also takes into account the inheritance rate “launching houses on the market and increasing” due to population aging and decline in new construction.

In such context, the company calculates the houses in excess will linger until 2022 on average, while in some areas they will never be absorbed. The stock will diminish progressively to 1.5 million dwellings in 2016 and with the demand at 230.000 units, it will boost sales by 24%.

Nevertheless, Fernando Rodríguez takes a “moderately optimistic” stance and he assures the situation varies in each area. The only exceptions are Madrid and coastal areas of Malaga and Alicante. In there, the stock is predicted to disappear within 2, 3 years.

Moreover, basing on the information made public by the Mercantile Registry, the report says around 30% of the real estate developers (9.000 firms) went bankrupt, accounting for 30% of all the loans granted by banks and Sareb.

 

Original article: Cinco Días (by Miriam Calavia)

Translation: AURA REE

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