Spanish property shortage in the next 3 years

The G-14 (group of largest developers in Spain), claim that there will be a shortage of properties in Spain in the next 2 to 3 years in certain areas if the level of granted licences continues to drop. Pedro Perez (General Secretary of the group) claims that due to the lack of building permits having been handed out, prices on newly built properties in urban centres have already been adjusted via supply and demand.

“The newly built property market is already in its fourth year of adjustment and now it the time for change and for the financing of buyers and promoters” he added.

He believes now is the time to start building again as in many cases prices have already dropped between 20 and 30%. And even with the still over supply of properties now is when new construction needs to be stimulated. Prices may continue to drop in certain areas due to lack of demand and over supply, but in many others there will be shortages soon.

According to the INE (Spain’s institute of Statistics), sales of residential properties rose by 17.6% in April and that it appears that at least on a national level there may be a recovery in the market. Of course, whether this continues once the new VAT levels are implemented on the 1st of July is yet to be seen.

Furthermore the end of mortgage deductions in 2011 has helped stimulate the market this year and that in 2011 the property market will be more dependent on the current restructuring taking place in Spain. From the consolidation of Spain’s saving banks to the new employment laws.

It should also be noted that although there are positive trends in the levels of property sales, they are still only a third of the transactions from the ‘boom’ years.

Andrew Bellés

Page copy protected against web site content infringement by Copyscape

Leave a Reply