The headline in the Corriere della Sera, Friday 30 May 2008, was "A million empty houses; an unusual Spanish crisis".
Cement chokes Spain's economy. The Spanish growth rate at 2.2% was one of the "most envied" in Europe, where the Eurozone median was "only 1.7%".
Due, however, to land speculation, Spain has overshot demand. According to a study by the University of Barcelona, housing prices in major cities of Spain have collapsed to 20% less than in 2006. Spain is for the first time in the grip of the unusual problem of having more houses than it needs.
Source:Maria Luisa Cohen in Europe.
Two days ago we wrote about the collapse of the French housing market. Everyone knows about the US housing market collapse. How soon before the Australian one hits bottom?
The fact is that construction is very heavily dependent on oil and banks are very dependent on construction.
With peak oil prices this cannot go on.
History of Spanish Housing 'Market'.
(Source: Sheila Newman, "Land and housing prices, land-use planning and housing systems in Australia and elsewhere (pdf file); the impact of globalisation, the internet, trends in natural increase, households and immigration: Submission to the Productivity Inquiry on First Home Ownership", page 36.)
Even during the civil war Franco was concerned about social housing. In 1957 the position of Minister for housing was created and publicly funded housing went from 100,000 dwellings in 1957 to 397,000 in 1973. By 1970 64% of the Spanish were homeowners. The 1973 oil shock saw massive cutbacks in public and private sector construction but rationalisation of the industry and renovation of older stock has given Spain the highest rate of homeownership in Europe.
About 70% of the Spanish are homeowners. There are few real-estate agencies in Spain because notaries and solicitors handle most sales.
Debt and price hikes up to 85% in 8 years had not yet resulted in a slowing market activity in 2003. Demographic changes, structurally low real-estate taxes and the large proportion of homeowners had all contributed to the high prices. Similarly to Thatcher's Britain, public housing was sold off to individual purchasers, many of whom then resold, causing a speculative boom which coincided with the wider global housing bubble.
See also: French housing market collapses of 29 May 08, Sydney's housing crisis - a different view of 27 May 08, No right to housing in the USA - Americans start to revolt of 26 May 08, Homeless may now sue state in France & Europe: Test Case of 26 May 08, European Union condemns Spain over 'disastrous' over-building of 21 June 07, In Spain, Water Is a New Battleground in the New York Times of 3 Jun 08