City of Madrid is running out of new-built stock
Saturday, July 2, 2011
The Spanish property consultancy Foro Consultores, has recently released its report about the Madrid housing market in new developments (2007-2011). The main conclusion of their analysis is that new-built property stock in Madrid was reduced by up to 50% between 2007 and 2010. The new-built property stock decreased from 10,000 units to just slightly more than 5,000 units in 2010.
Such an ease of property stock in Madrid is in conjunction with an average of 19% price reductions in the capital.
According to the report, property demand in the 2000′s was motivated by different factors:
- Immigration from 1998 to 2006 (an increase from 69,000 to 500,000 immigrants between 1998 and 2000 in Madrid alone).
- First-time buyers born in the 1970s and 80s, reached an age at which they were able to leave their parents’ home and buy a property on a mortgage basis, during the credit expansion of the 2000s.
- The high rate of divorce and family fragmentation increased the demand for housing.
3 Bedroom Flats Are Back On The Market
82% of the new developments build in 2007 were 1 and 2 bedroom flats built outside the city centre, in contrast with 3 bedroom flats which have been traditionally concentrated in the heart of the city – the oldest part of the capital, where, once upon a time, large families used to live in bigger homes. During the property boom period of 2004-2007, the market was replete with new 1 and 2 bedroom flats.
To read the full article with graphs about the data: Property investment trends in Madrid
In conclusion, Foro Consultores estimates that with the current stock quantity and slowness of sales, supply will come to an end in 16 months, assuming no new developments hit the market.
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