Madrid, Andalusia and Catalonia are the autonomous communities of Spain with the highest demand for new property, according to a new report from the IESE.
The report suggests that Spain needs to build an average of 100,000 homes per year until 2020 to meet the increased demand for property. From 2020 to 2025 the demand will increase and the requirement will be for 140,000 new homes to be built annually.
Between 1991 and 1997 there was an average of 250,000 homes built annually; from 1998 to 2007 this amount was more than doubled with the average number of homes being built annually rising to 580,000.
Post-crisis, the numbers fell dramatically with the average number of homes built annually between 2007 and 2014 falling to only 75,000 homes.
Despite the low numbers we are seeing now the property market has stabilised and new builds are on the cards once more.
Mixed Demand
Madrid, Andalusia and Catalonia will the the regions with the greater demand according to the report. Between 2016 and 2020 the report predicts Madrid will need to construct 25,245 new homes, followed by Andalusia where 14,410 will be required, while in Catalonia the requirement will be for 13,794 new houses.
For the period of 2021 to 2025, Madrid will see demand increase to 26,399, while Catalonia will need to increase construction to meet the demand of 20,308 new homes. These numbers are dwarfed, however, by Andalusia’s requirement with the report predicting the need for 39,296 new homes to be built annually.
The report draws special attention to Valencia where, during the period of 2006 to 2010 a total of 46,575 properties were sold, ranking it as the second most active region in terms of sales and purchases of residential property, being beaten only by Andalusia where 60,022 properties were sold in the same period.
However, for the period from 2016 to 2020 the demand in Valencia is expected to be for just shy of 10,000 properties, an increase of 21.4%, while for the period of 2021 to 2025 this is expected to increase to 11,029, representing an increase of 23.6% when compared to the period 2006 – 2010.
Price Forecast
The report further suggests the price of property will increase steadily over the next ten years. The prediction is that the average price per square metre of housing in Spain will reach 2,046 euros by 2025, and will increase to 2,212 euros by 2027. This suggests that house prices will return to pre-crisis (2007) levels by 2025, 18 years after the global financial meltdown crippled the real-estate market across much of Europe.
The annual change in the price of housing reached its peak in 2003 with a 19% increase over the previous year, while its lowest point was reached in 2012 when we saw an annual drop in prices of 10%. The highest price was seen in 2007 when the average price for a square metre of housing was 2,062 euros. The lowest average price was seen in 2014 when the same square metre would have cost as little as 1,400 euros.
