Are Madrid property prices about to boom?

Tuesday, October 12, 2010

Are Madrid property prices about to boom?

Developers in the Spanish capital of Madrid claim that property prices in the city could soon boom, on the back of a possible shortage of homes.

Fresh research by Asprima and Spain property firm Tinsa shows that there are currently just 8,626 new build homes in Madrid for sale. However, a separate estimate by Juan Blasco, a Madrid property expert, estimates that the city requires around 50,000 new homes a year, suggesting that there is indeed a shortage of properties in Madrid.

The report urges Spain property developers to start building more homes in Madrid “urgently to avoid a collapse in supply that triggers a surge in prices in the short-term.”

But with the Spanish property market in the doldrums, Spain property expert Mark Stucklin is sceptical about the house builders' claims.

He points to the fact that the last report produced Asprima and Tinsa at the end of 2009 showed that there were 48,000 new homes on the market, not too far from the current figure of 40,500 used by the Ministry of Housing. So what has happened to the other 40,000 new homes in Madrid over the last 10 months? They certainly have not been sold.

Stucklin comments: “When developers have open their mouths in the last few years it's usually been to say something self-serving or scream for government support, so it's difficult to see what they are driving at here. But don't be surprised if we soon hear them arguing for government money to build new homes and avoid a housing shortage. Could it be they are just softening us up?

“Or maybe they are telling the truth and Madrid is soon to suffer an acute housing shortage and price surge. But it's difficult to image a shortage of newly-built homes in the Madrid area; they have been building like crazy around the city for most of the last decade.”


A Place In The Sun