Ministry of Development: Real Estate Activity is Non-Existent in 40+ Spanish Municipalities

21 April 2019 – El Confidencial

There is barely any real estate activity in more than 100 Spanish municipalities with more than 10,000 inhabitants. In 42, not a single building permit to construct a new home was issued in 2018. Not one. And in another 100, fewer than five permits were issued, whilst in 200, fewer than ten permits were issued.

That is according to data from the Ministry of Development, which reveals the extent of the disparity between the booming areas of Madrid, Barcelona, the Costa del Sol and the islands, amongst others, and the complete dearth of activity in other parts of the country.

Asturias and Murcia are the autonomous regions that are suffering the most where construction activity has been all but suspended. The driving factors are multiple, but a lack of demand is key. Moreover, even where there is buyer interest, there is not enough buildable land to develop, construction costs are high, financing is hard to come by and qualified labour is scarce.

Even at the national level, although 100,000 new home permits were issued last year, that figure is still eight times lower than it was in 2006, when 865,561 new build permits were awarded. And although the experts agree that a healthy market will never see a return to the pre-crisis figures, the volume of new home construction is still well below the 150,000-200,000 benchmark that property developers consider sustainable.

By contrast, in certain parts of the Community of Madrid, lots more building permits were granted last year than during the height of the boom, for example, in Tres Cantos (657 in 2018 compared with 6 in 2006) and Rivas Vaciamadrid (1,345 compared with 831 twelve years ago). There was also a lot of activity in Boadilla del Monte, San Sebastián de los Reyes and Alcobendas. Beyond the capital, more new build permits were granted last year than in 2006 in Pamplona, Lasarte and Santiago de Compostela, amongst others.

Original story: El Confidencial (by E. Sanz)

Translation/Summary: Carmel Drake

Employment In The Real Estate Sector Rose By 6.4% In October

3 November 2017 – Eje Prime

The real estate sector is continuing its role as a driver of the growth of employment in Spain. According to data from the Social Security office, in October, real estate activity registered a total of 130,850 affiliated workers, 63 more than in September. That figure represents a YoY increase of 6.4%, with 7,921 more professionals now active in the sector.

Including October, real estate activity has now recorded four consecutive months above the threshold of 130,000 jobs. This hopeful figure for growth contrasts with the just over 118,000 workers that were registered in the segment less than two years ago, in January 2016. Last year, during one month, March, the figure actually fell below that threshold, to an annual minimum of 117,986.

Nevertheless, the sector has been recovering its strength, month after month, and the real estate business made its debut in 2017 with 124,053 affiliated workers registered for Social Security purposes. Since January, the MoM growth rate has stood at around 1%, with around 1,000 new jobs being created each month, until the summer, when the rate of increase stagnated.

The strong performance in terms of employment in the real estate sector goes hand in hand with the recovery of the job market in general right across the country. In October, the Social Security office registered 17 million affiliated workers, which represents an improvement of 3.9% on the total employment figures recorded in the same month in 2016. The growth rate of employment in the real estate sector (6.4%) clearly shows that it is moving at a faster pace than the economy in general.

If we add employment in real estate activity with employment in the construction sector (the construction of buildings, specialist construction work and civil engineering), then the sector recorded an average of 1.27 million affiliated workers in October, up by 6.7% compared to the same month last year.

Unemployment rose by 56,884 people in October

The number of registered unemployed people at the Public Employment Services’ offices rose by 56,884 in October compared to the previous month. Nevertheless, the increase was well below the average rise in the unemployment figure in October over the last eight years, which amounts to 90,000 people.

In YoY terms, unemployment in Spain fell by 7.9% in the tenth month of the year, bringing the total number of unemployed people to 3.46 million. By economic sector, registered unemployment decreased above all in the construction sector, whilst it increased in the agriculture, industry and services sectors.

Original story: Eje Prime

Translation: Carmel Drake

Euroval: RE Activity Is Still “A Long Way” Below The Boom Levels

7 June 2017 – Expansión

The real estate appraisal company Euroval has said that real estate activity in Spain is still “a long way” below the levels reached a decade ago.

Specifically, based on data from a simulation that it has performed, Euroval highlights that real estate activity in Spain currently represents a quarter of the level achieved during the real estate boom.

According to the appraisal company, the recent economic crisis “is still taking its toll” on activity in the Spanish real estate sector. In fact, it has highlighted that the number of mortgages granted, the volume of construction revenues and expenses and the number of transactions carried out are still way behind the figures recorded 10 years ago.

By region, whilst in Andalucía, Murcia, the Community of Valencia and Cantabria, for example, real estate activity was operating at 100% in 2004, it is now performing at 13%. Moreover, the autonomous regions that are improving their activity in this sector compared to 2004 are the Balearic Islands (45%), País Vasco (28%) and Navarra and Extremadura (22% in both).

According to Euroval, “there are no known cases of economic sectors in any country representing a similar percentage of GDP as the real estate sector did in Spain at the time of its greatest rise, after which it suffered losses of more than 80% in less than a decade.

The appraisal company considers that the volume of residential appraisals and the supply of housing are the “key” indicators that reflect this decrease. Specifically, in 2006, around 1.3 million appraisals were performed, compared with 625,000 last year.

In 2016, the autonomous region with the highest volume of appraisals was Andalucía, with 129,200. It was followed by Cataluña, with 120,400; Madrid, with 85,300; and the Community of Valencia, with 76,700.

In terms of the housing supply, Euroval’s conclusions highlight the “anomalous behaviour” in terms of housing demand in Spain, given that “despite the significant decrease in prices”, there is still “weak demand in light of the uncertainty surrounding the economy and employment”.

The data from the appraisal company also indicates that this “weak” growth has been concentrated in primary homes above all, which have increased from 15 million units in 2004 to 18 million last year.

The evolution of finished homes used to amount to around 536,600 properties, almost double the number started that year, whilst in 2016, the figures were 50,351 and 34,351 units, respectively. Euroval predicts that the market will tend towards growth over the next two years.

Original story: Expansión 

Translation: Carmel Drake