MADRID – The ‘stock’ of new homes ready for sale has plummeted over the past year in major Spanish cities, with 38.5% in Madrid and 17.8% in Barcelona.
According to the newspaper Expansión, the real estate sector has become a market at different speeds after the coronavirus. Firstly with a growth in sales, and secondly with a growth in prices which is widespread in much of Spain. However, that price can vary quite a bit depending on the type, quality, and location of the property. This is equally true for new homes.
New construction in medium-sized cities is on the rise
So while prices of the lowest-quality houses in the provincial towns with the worst connections to the major cities have barely recovered, the prices of the best-quality houses and new homes in medium-sized cities are recovering strongly. This is mainly because people have discovered the benefits of telecommuting.
Collapse stock of new build homes
This becomes clearer when one considers the rapid depletion of the stock of houses for sale in the major capitals. Notably, the number of new homes for sale in Madrid has fallen by 38.5% over the past year, while in Barcelona it has fallen by 17.8%.
This collapse in the new housing stock is due to several factors, both in terms of supply and demand, according to Expansión. On the one hand, demand has benefited from a strong reservoir of savings after the lockdowns. After that, buyers took advantage of the price discounts resulting from the reduced activity during the same period and legacies increased due to the high number of deaths during the corona crisis.
Preference for spacious new-build homes
Demand has mainly centred on new construction as, due to the rise of telecommuting, buyers are prioritizing house size. They want bright, spacious homes and preferably with outdoor space. On the other hand, the supply of this type of property is very scarce, because it has been limited by fewer newly built homes in recent years. Together, this shows that the stock of new-build homes has fallen in the past year. This can lead to a sharp rise in the price of this type of real estate.
Homes for an average of €580,000 in Madrid
There are currently 1,542 new homes for sale in Madrid. Last year there were 2,507. The built-up area of these houses is on average 121 square metres. The average price here is €4,790 per square metre. In other words, it concerns homes with an average price of around €580,000. Of these, 658 homes correspond to properties that existed before 2021, while the remaining 884 are new homes built in the past year.
Demand for new construction is greater than supply
While Expansión’s survey has detected 224 new construction projects totalling 9,337 homes, it also warns of rapid inventory depletion for the second consecutive year as demand exceeds supply of new construction.
Out of stock in 5.5 months
“If the stock sales pace continues at current levels, the supply of new homes in the capital Madrid could be exhausted in 5.2 months,” the text reads. And something similar is happening in the metropolitan area, where unsold homes have fallen 30.8% in the past year, from 4,465 available units to 3,088 homes.
A different phenomenon is occurring in Barcelona. In the city itself, the stock of new-build homes is falling sharply, but in the metropolitan area there is resistance. For example, the number of new homes for sale in Barcelona’s capital has decreased by 17.8% over the past year, from 1,409 units to 1,158 homes today. These are much smaller and more expensive housing than in Madrid (perhaps due to less available space and greater urban constraints). They are on average 103 square metres and are sold for €5,852 per square metre. That is €603,000 per home.
However, the situation is very different in the metropolitan area of Barcelona, largely due to the cancellation of numerous projects in Barcelona and the activation in other cities in the metropolitan area. In this area, the stock has barely decreased by 0.6% and the 12,523 promotions in progress predict a slower withdrawal of stocks.
Also read: Housing market in the Malaga province