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Glut of unsaleable new homes in Spain down by 20% in 2016

A glut of homes built in Spain during the boom housing years before the crash of 2007 which have been difficult to sell is steadily falling but some will never sell, according to new research.

Some of the houses may end up being demolished but the glut is now non-existent in several areas of the country, according to research from real estate services firm ServiHabitat, part of the Caix Bank Group.

The figures from the report show that the glut is expected to have fallen by 20% in 2016 to 388,000 homes and set to fall another 20% in 2017 to around 315,000, well down on the 650,000 peak of 2009.

The highest number of difficult to sell new homes are in the La Rioja region, Castille-La Mancha and Valencia and is smallest or non-existent in Madrid, the Balearics, the Canaries, and Catalonia.

ServiHabitat expects sales of all homes to rise in 2017. It says there were around 445,000 homes sold in 2016, up 26% compared to 2015. Its forecast for 2017 is for sales to rise by another 12%.

The firm also forecasts that the national average house price will have increased by 4.6% in 2016 and will rise 4.3% in 2017. But rising prices will not be universal with the biggest growth likely to be in Madrid, Barcelona and locations popular with overseas buyers including the Balearics and the Canaries.

The latest indices to be published suggest prices were flat towards the end of 2016 for seasonal reasons. Data from Tinsa shows that values were up by 0.2% overall in December.

It is expected that a return of overseas buyers in 2016 will continue into 2017, but fewer British buyers due to Brexit jitters. While Spain has always been popular with European buyers the country’s golden visa scheme which grants residency to people from outside the EU investing in property is also proving popular.

When it was introduced in 2013 with the offer of permanent residence for an investment of €500,000 or more in real estate, it was slow to take off but the latest figures show some 24,500 visas have now been issue of which 11,774 were to principal investors and 12,731 to family members.

Total foreign investment through the scheme was €1.71 billion as of the end of October 2016, up from €1.05 billion at the end of 2015, an increase of 63% with property the most popular investment stream accounting for 77%.
The data also shows that Chinese buyers had invested a total of €469 million in 666 real estate purchases by the end of October, up 75% compared to the end of 2015 while Russians invested €480 million, 46% in 2016.

The most popular destination amongst Chinese buyers was Madrid while Russian buyers are concentrated on popular holiday and second home locations such as the Costa del Sol, Costa Blanca, Costa Brava and Barcelona.