Over supply of property stalls Spanish housing market recovery

Spanish housing market over supply

With Spanish property being as cheap as it has been for years, there has arguably never been a better time to buy in the country.  Recent figures from the Irish Times have suggested that there are over a million Spanish homes for sale.  However, thanks to a lack of potential buyers in the market, it could take many years for this ‘backlog’ of new homes to be bought.

Fewer properties selling means over-supply

Even though prices in Spain are extremely affordable, high unemployment rates in the country and the UK recession means that fewer locals or Brits are buying property in the country.   The Spanish consultancy firm RR. de Acuña & Asociados has estimated that it will take Spain at least 6 years to sell the 1.2 to 1.5 million new homes currently on the market.

In addition to new homes, many second-hand properties are coming to the market as overseas investors try and minimise their losses having bought in the boom years.

Massive development in Spain led to over a million empty homes

The problem of over-supply largely arose from the house building boom that took place in Spain between 2001 and 2007.  At the peak, Spain was constructing more new homes than Britain, Franceand Germany combined with the most active areas being the Costa del Sol, Costa Blanca, Mallorca and Tenerife.

Many of the new properties were never completed as the global financial crisis meant that developers could not afford to continue the projects. 

In addition, many properties in Spain have been repossessed by banks and are now selling as ‘distressed properties ‘ – often way under their market value. 

So, with prices at their lowest levels for years and over a million properties in the country to choose from, there has never been a better time to pick up a property bargain in Spain.

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