There is a mantra that is repeated again and again by the majority of players involved in the real estate market, from businesses to universities to campaigners for the right to decent and affordable housing. With nuances and proposals for different solutions, all voices agree to emphasize that in Spain there is a lack of housing. One of the arguments put forward by the construction lobby is that the rate of growth in new housing over the past decade has been much higher than that of the construction of new properties. The difference is about 600,000 new homes, but it contradicts another statistic. Currently, there are nearly 450,000 new unsold homes.
Although responsibility for housing lies mainly with the communities and the sector ministry, the Ministry of Transport publishes the report on the new housing stock each year. This is work that cross-references completion certificates with real estate transaction statistics to estimate how many properties have been built, but not sold. According to the latest edition, published in June, in 2023, 447,691 properties had never been sold or inhabited.
According to estimates from the Bank of Spain, to compensate for the lack of supply in the real estate market, some 600,000 additional homes would be needed by next year. This calculation collides head-on with the nearly half a million “new homes” collected by the Department of Transport. To understand this apparent contradiction, two factors must be taken into account: the formula used in the report and the real estate bubble that burst in 2008.
“We are talking about new housing, but in the park, they are not necessarily all new,” explains Iván Auciello, head of the Housing Hub at the Future Policy Lab and doctoral student in economics at CY Cergy Paris University. The bottom line is that the stock is lying around: “There are probably houses that were built in 2010, which have not been sold, which have never been sold and which are still there,” explains- he.
As the previous chart shows, during the housing bubble, the inventory of unsold new homes increased at a rapid rate. In a few years when credit flowed and builders installed cranes without too many restrictions, this stock increased from 195,184 housing units in 2005 to 649,780 in 2009, more than tripled. From that year it began to decline and has remained virtually stable over the past decade. “This tells us that, despite the high demand, the stock remains unsold, this is because it does not meet the needs, either due to the location or the conditions”, explains the general secretary of the Association Spanish Construction Promoters (APCE). ), Beatriz Toribio.
According to the 2023 annual report of the Bank of Spain, “the existence of a high stock of unsold new housing could explain the low dynamism of the supply of new housing until 2018, but not in the most recent period “. Concretely, the supervisor emphasizes that the fact that, since then, the volume has not decreased despite the increase in demand “could indicate the lack of suitability of these accommodations to the current preferences of households”.
In the current real estate context, professor of applied economics at the University of Alicante Paloma Taltavull takes the ministry’s estimates with caution. “I am convinced that they made a good model, but the report does not explain it,” she believes. Thus, “when the statistical data are not clear, we must resort to rationality. You can’t have a market with brutal access problems and rising prices while there is oversupply,” he says. Concretely, the report indicates that the stock in relation to the total housing stock is 1.66%. Nearly two out of 100 homes are unsold. “This would generate such a large volume of supply that it would prevent prices from increasing or even falling, quite the opposite of what is happening,” explains the expert.
Doubts about the methodology relate to homes that do not need a certificate of completion, those that were sold en masse to vulture funds after the bursting of the housing bubble or those that could be rented by developers or the manufacturers themselves, for example. . which would not have been negotiated, lists Taltavull.
By autonomous community, most of the stock is concentrated in Catalonia, Valencia, Andalusia and Madrid. However, the percentage of unsold housing compared to the total stock is higher in La Rioja (4.34%), Castilla-La Mancha (2.78%), Canary Islands (2.68%) and Murcia (2. 26%). And by province, the largest stock out of the total is concentrated in Castelló (5.17%), Toledo (4.68%), Lleida (3.65%), Santa Cruz de Tenerife (3.35%), Almería and Ciudad Real (3.31%), Girona. (2.8%) and Teruel (2.58%).
“By analyzing the territorial distribution, half of the stock is found in coastal areas or areas that are not very dynamic in the sense of the labor market,” says Auciello. This means that supply is far from urban areas, stressed by demand. “50,000 unsold homes in Madrid is a lot, but it is not the same whether they are in the city of Madrid or in Griñón or Aranjuez,” adds the economist and former president of the Public Company rental Alejandro Inurrieta, who shares the analysis: “Or they are in areas where there is no demand or where prices are too high, but we also do not know if they are at to rent out.
According to Transport data, “the accumulated stock increases in Andalusia, Madrid, the Basque Country, Catalonia, Ceuta and Melilla and Aragon, while in the rest of the autonomous communities it decreases or is zero. Asturias, Galicia, Murcia and the Canary Islands are experiencing declines of over 2% and the Valencian Community is experiencing a decline of over 5%. As for the provinces, Guadalajara stands out, whose accumulated stock decreased by 41%.
The 2023 data coincides with a period marked by rising interest rates and rising Euribor, which have reversed this year. These increases, which have slowed the growth of the Spanish economy by 2.5 points over the last three years, seem to be in decline for the moment. In October, the European Central Bank reduced interest rates for the third time and, despite the silence of the banking authority, entities like Goldman Sachs are already planning a fourth reduction for December.
According to data from the National Institute of Statistics, 63,000 home sales were made last September, representing an increase of 41.5% year-on-year – adding to July’s 19% and 0.9%. of August – and the highest volume since July 2007. Furthermore, transactions on new apartments increased by 54.9% compared to the same month of 2023, with 12 531 operations, the highest figure in 20 years.
“Before the (real estate) bubble, it was a lot easier and there were a lot fewer measures to know where to build. Today, on the other hand, the demand, which is very high, especially in areas that are large demographic and tourist centers, is measured down to the millimeter”, affirms Toribio, who defends that during these two decades, ” the sector has become very professional” and “innovation, digitalization and transparency, both in terms of demand and supply” have more weight than in the years before the crisis. According to PACE data, at the start of the year, 95% of the housing that was going to be delivered this year had already been sold.
As the following graph shows, between 2011 and 2023, 1.34 million housing units were created, compared to 739,529 housing units completed during the same period. “Half of what is needed is built, or less than 100,000 per year, when 250,000 housing units are created,” explains Toribio, who highlights as “one of the main problems the lack of permanent land” and the “long and cumbersome “bureaucratic procedures. “. “It can take 10 to 20 years to manage an urban project,” he laments.
This is how new houses and new houses evolved
new houses, Finished houses And difference between the two within each ACSC and at the national level
Source: INE and Ministry of Transport
The socialist part of the coalition government tried unsuccessfully to have a reform of the land law approved, demanded by municipal councils of all political persuasions, but which was rejected by the People’s Party. The rule was specifically intended to streamline these procedures. However, the construction of new housing is one of the solutions, but not the only one, to alleviate the housing problem in Spain. “We obviously have to build, but construction is not the only strategy for increasing supply. It must be affordable housing, but other policies are also needed, such as usage-based property tax changes (IBI), promoting high-rise construction, social housing pools and limitations on tourist and temporary rentals,” lists Auciello. .
