Spanish Property Glut Shrinks

June 16th, 2009

Spain had 614,000 new homes sitting unsold at the end of 2008 -lower than most analysts’ estimates- according to the first major housing ministry study, which surveyed or visited 6,810 real estate companies, or around 70 percent of the sector.

The survey is the first attempt by any public or private body to pin down the size of the stock of unsold Spanish property -estimated at over 1 million homes by some economists- using a methodology similar to the respected Royal Institution of Chartered Surveyors (RICS) study of the UK market.

“The survey looks good to me, very representative and well designed,” said Jose Carlos Diez, an economist with Intermoney in Madrid. However, he added the figure was still represented a serious challenge despite being almost half of many estimates.

“You should not lose perspective, the figure is less than expected, but 600,000 homes is still a lot of homes.” At the current rate of sale, the stock will take around three years to be run down while Spain’s housing market -the former motor of economic growth- suffers a hangover after a 10 year boom. In that time prices tripled and huge tracts of the coast in were disfigured by rows of uniform apartment blocs.

In 2007 alone Spain built 690,000 new homes, even though underlying demand is normally less than half that. Now hundreds of builders are going bust every quarter amid a 34 percent dive in sales in the year to date and their assets clog up banks’ asset sheets.

The survey published on Friday also notes that Spain had 627,000 homes in the process of construction at the end of 2008 — 70 percent of them almost finished and 39 percent already sold.

Related posts:

  1. Spanish Property Sale Slowdown Slowes
  2. Spanish Property Prices Continue to Fall
  3. Spanish Property Still Strong
  4. Spanish Property Market Is Recovering

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