Seeing as there is little to remark on here beyond a bit of volatility surrounding Easter holidays, we'll take the opportunity to comment upon a very odd statistic emitted last month by the Spanish Ministry of Housing. But first, the quick take...
Year-on-year new +9.8%, used +26.6%, total +17.6%.
Month-on-month new -7%, used - 10.1%, total -8.3%.
12-month rolling new sales continue flat at about 222,ooo units for the 6th consecutive month. The same for second-hand dwellings proceeds upward as they has for the same period.
The continued outperformance of sales of used homes, to us, indicates that there remain downward pricing pressures in the market. Individual sellers are much more agile and flexible in the face of buyer resistance than are businesses.
Continuing with the real estate theme, the Spanish Ministry of Housing last month issued a rather astounding report on the existing housing stock in this country. Their conclusion, shown in the accompanying table, was that the inventory of unsold new homes increased at a rate of 12.1% over the course of 2009.
This, to say the least, is counterintuitive. Any idiot with two eyes and an automobile knows that the construction cranes have disappeared throughout the country from the skyline above abandonned projects and that virually nothing new is coming on line. But, as always, we have the explanation.
Vivienda's methodology is to keep a rolling tally of the number of house sales reported by the INE and the number of work termination certificates issued by the Colegio de Arquitectos Técnicos as a proxy for finished projects. Those thinking there might be some correlation between new stock and similar permissions might keep the following sequence of events in mind.
1). A builder finishes a project to the point that he can apply for approvals and finally get his buyers' last installments in his pocket (to parlay into another dream that will finally bankrupt his bank, if not himself);
2). He then notifies the Ministry of Industry so that they can come and inspect the electrical installation - something which must be done before Peritos sends their building inspector over;
3). He waits;
4). Finally, after a year or year-and-half of desperation, he approaches the local notary and property registrar and, begging on hands and knees, gets them to agree to formalize the purchase agreements and deeds before he is forced into bankruptcy by the slowness of the guy with the clipboard and the voltage meter;
5). The buyer, despite their doubts (and knowing full well that nothing works as advertised in this country) pay up and start buying furniture;
6). To ensure electrical service to the individual units, the builder gets the local specialist to plug the temporary work connection into the mains and... the folks move in;
6). Industria finally shows up, the técnico also in turn. The relevant documents are turned over to the town hall and the place becomes legal.
In the case of this writer's home, it was occupied in April, 2004. The cédula de habitabilidad was issued in January of 2007. The place up the road now lived in by his step-daughter was finished in December of 2006, occupied 10 months later and made official in the winter of 2008 - the date upon which the housing ministry would add it the stock.
Of course, some might argue that these numbers eventually cancel each other out. But to assume that the few promotors that actually finished unsellable homes in 2009, rather than walking away, are even going through the process of fully legalizing them is stretching it. This is all ancient history.
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6 Comments:
I would somewhat disagree with the statement that all cranes have virtually disappeared. I'm based in a reasonably central part of Madrid city and over the past 6 months or so, projects that a year earlier were mothballed have restarted and are now nearing completion.
My impression is that there is quite a difference between e.g. central Madrid, Barcelona, etc, and the rest of Spain.
In contrast, the area between e.g. Toledo and Sevilla looks just as abandoned as it did a year ago.
Sure, it's been a few months since I've actually done M-50 past Móstoles, etc. Should have said 'in 2009', and so on.
Yours is interesting news in its own right, though.
Thanks for contributing.
We have a couple buildings that haven't had any construction going on for the last year, but the cranes are still there.
I guess they're waiting for them to collapse or something.
No. The crane company is bankrupt and nobody knows who owns them yet.
The cranes here in the deep south have largely been left to rust over the last couple of years, and any rare movement now elicits curious stares.
My understanding is that Bank of Spain rules require that banks cannot dispose of properties for less than the struggling developer mortgage (or large percentage thereof)on them, thus styming market decreases in price. Any thoughts on that one?
I don't know about that one. The BE also insists that they mark 30% off the value of equity-for-debt repossessions. The fact is that the banks' carrying cost for this stuff is so low that as long as the ECB is providing liquidity there is no real necessity to lower prices much.
Cheers
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