Catalonia’s new housing stock decreases for the first time since 2006

Barcelona (ACN).- Catalonia also suffered a real estate bubble in the 2000s, but it seems that the adjustment has been quicker than in the rest of Spain considering how the housing stock is now evolving. In Catalonia, the stock of unsold new houses decreased in 2010 for the first time since 2006, according to a study from CatalunyaCaixa led by the Barcelona Autonomous University (UAB) professor of applied economics Josep Oliver. At the end of the year there were 103,000 unsold new houses in Catalonia, which represent 12.88% of Spain’s total, with 800,000 unsold new houses (Catalonia brings 19% of Spain’s GDP and has 16% of its population). The real estate market and housing stock is therefore not homogenous across Spain, and neither is it in Catalonia. In larger Catalan cities, there is almost no stock left of unsold new houses. The best placed city is the Catalan capital. In Barcelona, there are only 0.5% of new houses and flats left to be sold. According to the study, the housing market in Barcelona city is beginning to stabilise and a recovery should start very soon, in terms of construction activity and prices. However, in smaller cities and rural areas, the housing stock would not be fully absorbed until 2015 regarding first residences; holiday house stock could take longer for areas less frequented by tourists.

For the first time since 2006, the stock of new houses decreased in Catalonia. It decreased by 2,000 units. At the end of 2010 Catalonia had 103.000 housing units to be sold. Spain as a whole had around 800,000. In fact the Catalan housing market evolved differently to the rest of Spain, so when looking at the entire Spanish market, the new housing stock increased with 14,000 new units, a 2% increase, while in the Catalan stock was being reduced. Catalonia should rid itself of all its stock in 2015, although some cities would see their stock of new housing on sale disappear in the near future. In addition, first residences are sold quicker than holiday homes. Holiday homes will be the latest part of the current stock to be sold, and they represent a third of it.

In larger cities and provincial capitals the stock is much smaller than in smaller populations and rural areas. Looking at the entire Spanish market, provincial capitals have on average 1.7% of their new houses for sale out of all the existing housing market. However, in cities with less than 100,000 inhabitants, the stock is double, corresponding to 3.9% of the total.

Looking at the entire Catalan market, there is a 2.7% stock of unsold new housing facilities, which is inferior to the entire Spanish average, set at 3.2%. Barcelona Province has a 2.2% stock, the same figure as Lleida Province. Girona Province has 3.2% stock and Tarragona Province, 4.8%.

Barcelona city has only a stock of 0.5%

The Catalan capital, Barcelona, has almost no stock left. It only has 0.5% of unsold new housing. According to Josep Oliver, this means that housing prices are probably about to stop decreasing in the city and stabilise. Other cities in Barcelona Metropolitan area also have small stocks, such as Badalona (1.5%), Sant Boi de Llobregat (1.2%) or L’Hospitalet de Llobregat (1.7%). Beyond Greater Barcelona, Lleida also has a small stock of new housing for sale (1.6%). Above the Catalan average are cities such as Tarragona (3.2%), Sabadell (3.1%), Girona (3.8%), Reus (3.9%) or Figueres (4.4%).

Oliver explained that the reduction of the stock could be accelerated if the economic situation improves and the ‘baby boom’ generation (who currently is between 40 and 55 years old) decides to purchase holiday homes.

Prices in Barcelona city should stabilise but the Catalan average should still drop by 10%

Despite prices stabilising in Barcelona city, due to the end of the stock, in most of Catalonia they still have to drop around 10% according to the study. However, he insisted that in larger cities or where the stock is smaller, the prices should stabilise quite soon at levels similar to the current ones.

A heterogeneous picture for Spain

Looking at Spain’s different areas, there are also great differences. The city of Castelló leads the stock ranking: it has 20% of unsold new housing (from the total housing units), a titanic bubble very difficult to absorb. For the entire Castelló province, with tourist locations such as Orpesa, Vinarós, Peníscola and Benicàssim, the percentage is 12.6%.

In Catalonia, the worst scenario is in the city of Tortosa, in the Delte de l’Ebre, with 9.1% of unsold new housing. The counties of Ribera d’Ebre, Montsià, and la Selva are the places where the stock is larger than in the rest, in relative terms. However, Josep Oliver emphasised that these Catalan counties will see their stock absorbed much more easily than in other places throughout Spain, such as Castelló.

Housing construction falls

2011 could end with 65,000 more new flats and houses being built in Spain, from which 11,000 will be in Catalonia. These figures are light years away from those of 2006, when 665,000 new housing units were initiated, 102,000 in Catalonia. It was the peak of the housing bubble in Spain. In the last quarter of 2010, the in-construction housing rate dropped in Spain by 91.4% in relation to the 2004-2006 average. In Catalonia, it dropped by 93%.