Excess of new housing in Spain

The crisis in the property sector causes developers to find alternative use for the empty properties and they are trying to negotiate an agreement with the government renting agency set up by the Socialist government two years ago.

In little more than 2 months the Public Agency for Renting in Spain (SPA) created by the Ministry of Housing has received the offer of 6000 newly built flats from property developers interested in renting them out because they can’t find enough buyers.

According to figures released yesterday, over half of flats that are offered to the SPA for rent come from estate agents rather than from private owners. In general it is usually flats from small to medium sized property developers that are being offered.

Spanish building industry suffers EU's highest drop

Spain’s contruction industry experiences highest drop in production in November compared to all other EU countries

According to figures published by the EU statistics office (Eurostat) production in Spain’s construction industry dropped by 3.9% in November 2007 compared to the previous month. During this period the real estate sector throughout the Euro zone suffered a fall in productivity of 0,8%, while the 27 EU member states experienced a drop of 0.2%.

In October 2007 statistics showed a rise of 0.6% in the Euro zone and a rise of 0.3%for the EU 27. The statistics compiled by Eurostat take into account seasonal variations that affect the real estate sector and include subsectors and civil construction.

Among the 10 EU member states that have provided statistics for November 2007 Spain saw the steepest drop in production followed by Portugal with a drop of 2.8%, Slovenia saw a drop of 2.6%, Germany 0.7%, France 0.4%, Slovakia and Holland both experienced a drop of 0.1%. The only 3 EU member states that saw monthly rises in productivity were Poland (2.3%), Rumania (1.8%) and Sweden (1.6%).

On the whole the construction of buildings dropped by 1.1% in the Euro zone and 0.2% among the 27 EU member states during October 2007.

Statistics for the civil construction industry also dropped by 0.5% both in the Euro zone and among the EU 27 member states in November last year. This compares unfavourably for figures for the previous month which shows a growth of 0.1% in the Euro zone and and 0.4% for the EU 27.

Statistics also show a drop in productivity in the construction industry when comparing figures for November 2007 and November 2006 with a drop of 0.8% for the Euro zone although it rose by the same amount among the EU 27.

When comparing statistics over 12 months production dropped in 4 EU member states and grew in 6 others. The highest falls were registered in Germany and Slovakia at 6.3% and Spain at 6.2% followed by Portugal at 2.8%.

The highest growth in productivity in the construction industry was in Rumania which experienced a spectacular growth of 32.6% together with Poland which saw a growth of 11.1%. Slovenia experienced a growth of 9.1%, Sweden 6.3%, Holland 4.8% and France 2.1%.

Sector by sector the construction of buildings dropped by 0.7% in the Euro zone although it rose by 12% among the EU 27 while civil construction dropped by 1.2% in the Euro zone and rose by 0.15% among the EU 27.

Immigrants in Spain boost the Spanish housing market

According to recent statistics published by Spanish newspaper El Mundo, 33.63% of people who take out a mortgage in order to buy property in Spain are immigrants. This figure is expected to increase in the future especially in the market for used properties.

José Luis Álvarez Arce a lecturer on the Spanish economy for the University of Navarra said that the Spanish property market is noticing the effects of large scale immigration which began around 7 years ago. However the habits of immigrants when buying a property in Spain differ to those of Spanish citizens.

According to the 5th report by Technocasa on the housing market in Spain carried out by the School for International Commerce in the University of Barcelona immigrants from Asia take out an average mortgage for 215.625 euros, those from China take out averages mortgages for 250.000 euros. South American immigrants take out mortgages for around 210.563 euros while African immigrants take out smaller mortgages on average for around 167.892 euros. The average figure for a European citizen is 179.640 euros and the average age is 36 years old.

Another significant difference is the number of title holders of the mortgage. While 71.4% of Spanish nationals prefer to take out a mortgage individually only 40% take out mortgages in a couple.

However these figure contrast with those for immigrants who take out mortgages in Spain. Nearly 60% of these mortgages have 2 or more title holders while 30% have 2 title holders.

Between the first quarter for 2006 and 2007 Ecuadorians were the highest group of immigrants in Spain to take out a mortgage of one kind or the other (9.8%) followed by Moroccans (4.4%) and Rumanians (3.2%). Columbian, Bolivians, Nigerian and Senegalese immigrants have also shown great interest in acquiring properties.

According to Carlos Lles the professor of Urban Sociology for the University Carlos III in Madrid the number of immigrants buying properties in Spain will increase in the future. Although many recent arrivals do not have the need or capacity to buy a property immediately, this changes once they have spent a few years in the country and have found their feet.

Lles predicts two different scenarios for the future. One that immigrants will require more properties in order to bring their families together, and the other that crises in sectors that traditionally employ immigrants (eg construction) could lead to unemployment which could, in turn, make it more difficult for immigrant mortgage holders to keep up with their payments.