Surplus stock of flats will take between two and five years to be absorbed into housing market
Following a decade of boom in the construction industry large areas of the Spanish coastline now appear to be a concrete cemetery. Town halls and property developers are both responsible for the thousands of houses and flats that now lie empty all along the Spanish Mediterranean coastline.
Given the number of surplus properties it is now estimated that construction companies have built up to three times the number of houses and flats needed to fulfil demand. At the end of 2008 there were 997,652 unsold houses and flats in Spain. According to the Ministry for Housing 47.2% of these properties (almost half a million properties) are concentrated in Mediterranean provinces.
It is predicted that it could take 2.2 years for the surplus stock to be absorbed if 350,000 and 400,000 flats are sold each year – a very optimistic figure which is based on a forecast by the Professor for Applied Economics, José García Montalvo, for the Pompeu Fabra University.
Although he has also said that it could take up to 3 years for this to occur.
However, few people are willing to predict how the housing market will evolve from its current crisis. On the one hand if sales take place at the rhythm of sales seen in 2007 when the market slowed down significantly it will take just 1.3 years to absorb the surplus stock. However, on the other hand it could take up to 4.8 years for this surplus to disappear as indicated by figures published by the National Institute for Statistics.
Furthermore, in Catalonia, the Balearic Islands, the Comunidad Valenciana, Murcia and Andalucía building work on new housing developments has stopped all together. As a result there are many half finished neighbourhoods which have been nicknamed ‘ghost towns’.
However, the Mediterranean coastline is not the only area affected by the crisis in the housing market. Many cities are also suffering the effects of the crash in the property market too with many property developers having gone into administration. According to the consultancy agency CB Richard Ellis in Madrid 9.29% of the total office space in the Spanish capital is now unoccupied. In terms of square metres this represents 1.07 million m2 and it is forecast that this figure will go up by 290,000 m2 over the next few years.
In Barcelona, which has half the amount of m2 dedicated to office space the figure for unoccupied office space is 8.39% with 434,000 m2 currently available. It is also predicted that new projects will add 182,000 m2 to this figure.
Data taken from El Pais