The ‘stock’ of new properties ready for sale collapsed in large cities in the last year, falling 38.5% in Madrid capital and 17.8% in Barcelona.
The real estate sector after the coronavirus has become a market at three speeds, with a growth in sales and prices widespread throughout much of the Spanish geography, although with great differences depending on the type and quality of the real estate. Thus, although the lowest quality properties in the cities with the worst connections to the big cities have barely recovered, the best quality homes in medium-sized cities are recovering strongly, thanks to the possibilities opened up by teleworking, and new flats within the big capitals are enjoying a huge boom in demand. This is especially evident when looking at the rapid depletion of the stock of homes for sale in the big capitals. Specifically, the number of new properties to be sold in the capital of Madrid has plummeted 38.5% in the last year, while it has dropped 17.8% in Barcelona.
This collapse of the new housing stock is due to several factors, related to both demand and supply. On the one hand, the demand had a strong reservoir of savings after the confinement that it has decided to put into play by taking advantage of the price discounts caused by the drop in activity and the increase in inheritances linked to the coronavirus. And, in addition, this demand has been concentrated on new construction due to the fact that, as a result of the boom in teleworking, buyers now prioritize the size of the properties, their luminosity and their thermal and sound insulation compared to the location. On the other hand, the supply of this type of property is very scarce, limited by the lack of new developments in recent years. All this has caused the stock of new housing to be sold to sink in the last year, which can cause a sharp rise in prices in this type of property.
Specifically, the supply of new homes for sale stands at 1,542 units in the municipality of Madrid, compared to the 2,507 homes available last year. On average, the constructed area of these offered homes is 121 square meters and their average price is 4,790 euros per square meter. In other words, these are homes with an average price of around 580,000 euros. Of this figure, 658 homes correspond to properties existing before 2021 while the other 884 are new units built this last year. Although the study has detected 224 new housing developments totaling 9,337 homes, it also warns of the rapid exhaustion of the stock level for the second consecutive year, due to the fact that demand exceeds new buildings. “If the rate of absorption of the stock were maintained at current levels, the supply of new housing could be exhausted in 5.2 months in the capital of Madrid,” the text states. And something similar is happening in the metropolitan area, where unsold properties have fallen by 30.8% over the last year, going from 4,465 available units to 3,088 homes.
On the other hand, a curious phenomenon occurs in Barcelona, since the stock falls sharply in Barcelona but resists in its metropolitan area. Thus, new homes for sale in Barcelona capital have been reduced by 17.8% in the last year, going from 1,409 units to 1,158 homes today. These are much smaller and more expensive homes than in Madrid (perhaps due to less space available and greater urban restrictions), since they consist of 103 square meters, on average, which are sold for 5,852 euros per square meter. That is, 603,000 euros per home. However, the situation is very different in the metropolitan area, largely due to the cancellation of numerous projects in Barcelona and the activation in other cities in the metropolitan area. In this area, the stock has barely been reduced by 0.6% and the 12,523 promotions underway predict a slower absorption of stocks.