completions down 3pc on last year but glut still
In an industry where it takes around 2 years for
production output to respond to demand, construction
completions are finally falling on an annualised basis. That
will take some pressure off the market.
Construction completions fell 30pc to 55,741 in August
compared to the same month last year, according to figures from
the Ministry of Development. At that level they are even lower
than planning approvals, which reached 62,868 in August.
Planning approvals plunged at the start of the crisis over 2
years ago, but thanks to long lead times in the building
industry construction completions continued growing into the
beginning of this year, aggravating Spain’s glut of newly-built
If the trend continues, the year will end with no more than
84,000 construction completions, the lowest level in a decade.
Likewise for planning approvals, which will end the year around
I have read articles in the Spanish press interpreting these
figures as a sign that the market is starting to digest the
glut of new homes. And Elena Salgado, the Minister of Finance,
says the glut has stopped growing and will shrink by 20pc in
2001. But by my reckoning the glut will keep growing as long as
construction completions are higher than new home sales, which
they were by around 30,000 in August alone.
Another dimension that needs to be pointed out is the
unequal distribution of the glut. There are too many new homes
where nobody wants them and not enough where people do. Soon
there will be shortages in some areas, and gluts in others.
Article reproduced with kind permission
from Mark Stucklin of the www.spanishpropertyinsight.com