Property Glut With No Demand Unless Sold At “Demolition Cost”

By on February 28th, 2015

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There are 100,000 homes in Spain with no market unless they are offered at “demolition prices,” claims Bankinter, a Spanish bank.

There was a time not so long ago when any property built in Spain could be sold at sky-high prices in just a matter of days, or so it seemed. Even tiny apartments in unattractive locations with poor designs and build quality – all of it was snapped up fast. But today, seven years after the start of Spain’s housing and economic crisis, there are still around 100,000 homes languishing on the market that will never find a buyer unless sold at “demolition cost”, argues Bankinter in its half-yearly report on the Spanish property market.

The main problem with this stock of unwanted homes is location. These unsellable properties, which amount to almost 15 per cent of the official glut of 700,000 properties (using data from the Housing Department and the Sareb ‘Bad Bank’) are located in places in Spain with little appeal for investors and ready buyers, argue Bankinter.

Paradoxically, there is now a shortage of certain types of homes for sale where demand is strongest, in prime locations of Spain’s main cities and the coast. This demand will be catered to “over the next few quarters through refurbishment and new developments,” say Bankinter, meaning a steady improvement in the fortunes of Spain’s building industry.

That said, the Spanish home building industry is still in deep crisis and a long way from normal.

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