The Shrinking Property Glut

The Spanish property glut turns out to be half the size that many economists had previously estimated, according to the most comprehensive survey yet undertaken. 

According to the new study, reports Reuters, there were only 614,000 new homes unsold at the end of 2008.  Some economists had previously estimated the glut to be almost double the size.

The Housing Ministry study surveyed 6,810 real estate companies, constituting 70% of the industry with the same respected methodology used by RICS (The Royal Institute of Chartered Surveyors in the UK).

The glut has put the building and construction industry in Spain on hold until demand can take up the slack, causing thousands to lose their jobs.  However, economists still warn that it may take 3 years to sell this surplus housing stock.

Almost half of the building has been along the over developed coasts of the mainland.  Major cities, such as Madrid, have also seen many new homes built in and around their suburbs. 

Tenerife, a quiet backwater on the Spanish property scene, experienced comparatively few new property developments during the boom and therefore has very little in the way of surplus new development. Nevertheless, construction work has virtually stopped on the island, and the stock of new property in Tenerife available for sale in the popular South of the island constitutes only a few hundred units.