Excess of Holiday Homes Starting to Clear

Spain’s glut of newly-built holiday-homes will take the market between 4 and 5 years to digest, according to José Manuel Galindo, President of the Association of Developers and Constructors of Spain (APCE). The over-supply of first homes, on the other hand, will have gone within 2 to 3 years.
There were 700,000 new homes on the market at the end of 2009, according to the APCE’s figures, many of them holiday homes in coastal provinces. Thanks to a recent rebound in property sales, up 16% in February and 8% in March, and a process of price adjustments that Galindo claims is now almost over, the glut of new homes is already disappearing in some parts of Spain. For the first time since the Spanish property crisis began, there are signs of light at the end of the tunnel, in some areas at least.
For example, the excess inventory of new homes in Cantabria, an autonomous region in the north of Spain, will have gone in less than 2 years, whilst the same process will take 2 to 3 years in some provinces of Andalucia and Galicia. Provinces in the Valencian Region, on the other hand, will need 4 to 6 years.
Referring to the recent bounce in homes sales, Galindo described it as “the best news in almost a year”. He is confident sales will continue growing to a total of around 300,000 this year, though he did acknowledge that Government’s moves to slash the deficit, such as reducing pay for civil servants, could derail the recovery in home sales.
Looking to the future, Galindo expects the real estate sector to fall from 18% of GDP at the top of the boom to 12% today, with residential construction accounting for 6% to 7%. “We have adjusted more than our fair share” he said of his industry.
Story from Mark Stucklin