Why there are half a million new homes in Spain that no one wants to buy
In Spain, there are 450,000 new builds for sale that nobody wants to buy, many of them in Mediterranean coastal areas, at a time when an apparent lack of housing is driving up prices.
There are almost half a million never-lived-in homes that no one is interested in across Spain. Most of them remain unoccupied as they are still owned by the developer and were built during Spain's real estate boom in the nineties and noughties.
The numbers were revealed by Spain's Ministry of Transport, Mobility and Urban Agenda. As of December 31st, 2022, there were a total of 444,546 unsold houses, which represents 1.7 percent of the total housing stock in Spain, made up of 26 million properties. The majority of these were new builds.
The figures are particularly alarming given that according to the Bank of Spain there is currently a real estate shortage and supply is unable to meet demand.
Many of the properties that remain empty and unsold are located in Mediterranean coastal provinces such as Alicante, Castellón, Murcia and Almería. There are, however, several inland too.
The province with the greatest number of unsold new homes is Madrid with 48,124 properties, followed by Barcelona (46,053), Alicante (33,354), Castellón (23,486), Valencia (21,437), Toledo (20,717), Murcia (19,769), Santa Cruz de Tenerife (18,152), Almería (15,505) and Seville (14,787).
In the four most populated provinces - Madrid, Barcelona, Valencia and Seville - never-lived-in homes represent around two percent of their registered provincial housing, but in provinces such as Castellón, Toledo or La Rioja the rate is close to five percent.
The number of unused new builds in Spain has only decreased by 32 percent in the last 14 years, with 205,000 homes have been sold.
What about empty second-hand properties?
Unfortunately, the problem doesn’t stop with new builds only. There are a substantial number of second-hand homes in Spain that no one wants to buy either.
It’s difficult to know exactly how many empty homes in total there are in Spain because figures are not up to date and different bodies report different numbers. The latest official data available is from Spain's National Statistics Institute (INE) and dates from 2011, more than a decade ago.
At that time, the state body claimed that there were 3.4 million empty apartments. Of these, 770,000 had been built between 2002 and 2011.
This was controversial as there was no unified definition of empty housing, nor a clear methodology on how to census it. Therefore, the INE decided not to update the data each year.
Instead, the stats institute is working on a new report based on energy consumption to find out which properties are truly occupied.
Why are these never-lived-in properties not being sold?
If Spain has such a problem with lack of housing, then why do so many remain unsold or empty?
This is the key question but it has so many complex answers.
When Spain's real estate bubble burst, many buildings were left half-built and so were not fit to be sold. Others were completed, but not according to official regulations, or were deemed illegal because the developers had failed to get the correct planning permission. Many completed homes were also used to grow the asset portfolios of the banks.
According to a recent report from the Bank of Spain, the number of empty and unsold homes is due to the current offering not being adequate enough. The current demand is for larger buildings, with open spaces and energy efficiency, which many of these earlier buildings didn’t take into consideration.
Forty-eight percent of properties in Spain are 60 to 90 sqm in size and in Barcelona and Madrid, they’re even smaller on average - 60 to 75 sqm. Many properties in Spain also don’t have any outdoor space. During and after the pandemic, both became very important factors for those considering buying a home.
The current economy - high rates of inflation and soaring mortgage costs have also meant that many people who may want to buy a property are not in the financial position to do so.
What is being done to solve the problem?
Spain’s new housing law, which recently came into force, has tried, in part, to tackle the issue of empty housing.
READ ALSO: What are Spain's plans to charge owners of empty homes more tax?
Local councils now have the power to implement a surcharge of up to 150 percent on the property tax (IBI) quota for all those owners who have had an empty home for two years without just cause.
If the property has been empty for three years, the surcharge could reach 100 percent, and there could also be an additional 50 percent rise in the case of properties whose owners have two or more flats in the same municipality.
The government is hoping this will force many empty properties back on the market.
In early 2023, the Valencian government also introduced an extra tax on empty homes for landlords who own more than 10 properties, which could include developers. This will affect properties that are not up for sale or rent and have been empty for six months or more. In this case, they will have to pay monthly fines.
Back in 2021, the Basque Country also contemplated a similar plan to introduce economic sanctions on empty properties in the region. The mere threat of these fines, however, has seen the number of empty properties in the Basque Country fall by 25 percent.
Comments
See Also
There are almost half a million never-lived-in homes that no one is interested in across Spain. Most of them remain unoccupied as they are still owned by the developer and were built during Spain's real estate boom in the nineties and noughties.
The numbers were revealed by Spain's Ministry of Transport, Mobility and Urban Agenda. As of December 31st, 2022, there were a total of 444,546 unsold houses, which represents 1.7 percent of the total housing stock in Spain, made up of 26 million properties. The majority of these were new builds.
The figures are particularly alarming given that according to the Bank of Spain there is currently a real estate shortage and supply is unable to meet demand.
Many of the properties that remain empty and unsold are located in Mediterranean coastal provinces such as Alicante, Castellón, Murcia and Almería. There are, however, several inland too.
The province with the greatest number of unsold new homes is Madrid with 48,124 properties, followed by Barcelona (46,053), Alicante (33,354), Castellón (23,486), Valencia (21,437), Toledo (20,717), Murcia (19,769), Santa Cruz de Tenerife (18,152), Almería (15,505) and Seville (14,787).
In the four most populated provinces - Madrid, Barcelona, Valencia and Seville - never-lived-in homes represent around two percent of their registered provincial housing, but in provinces such as Castellón, Toledo or La Rioja the rate is close to five percent.
The number of unused new builds in Spain has only decreased by 32 percent in the last 14 years, with 205,000 homes have been sold.
What about empty second-hand properties?
Unfortunately, the problem doesn’t stop with new builds only. There are a substantial number of second-hand homes in Spain that no one wants to buy either.
It’s difficult to know exactly how many empty homes in total there are in Spain because figures are not up to date and different bodies report different numbers. The latest official data available is from Spain's National Statistics Institute (INE) and dates from 2011, more than a decade ago.
At that time, the state body claimed that there were 3.4 million empty apartments. Of these, 770,000 had been built between 2002 and 2011.
This was controversial as there was no unified definition of empty housing, nor a clear methodology on how to census it. Therefore, the INE decided not to update the data each year.
Instead, the stats institute is working on a new report based on energy consumption to find out which properties are truly occupied.
Why are these never-lived-in properties not being sold?
If Spain has such a problem with lack of housing, then why do so many remain unsold or empty?
This is the key question but it has so many complex answers.
When Spain's real estate bubble burst, many buildings were left half-built and so were not fit to be sold. Others were completed, but not according to official regulations, or were deemed illegal because the developers had failed to get the correct planning permission. Many completed homes were also used to grow the asset portfolios of the banks.
According to a recent report from the Bank of Spain, the number of empty and unsold homes is due to the current offering not being adequate enough. The current demand is for larger buildings, with open spaces and energy efficiency, which many of these earlier buildings didn’t take into consideration.
Forty-eight percent of properties in Spain are 60 to 90 sqm in size and in Barcelona and Madrid, they’re even smaller on average - 60 to 75 sqm. Many properties in Spain also don’t have any outdoor space. During and after the pandemic, both became very important factors for those considering buying a home.
The current economy - high rates of inflation and soaring mortgage costs have also meant that many people who may want to buy a property are not in the financial position to do so.
What is being done to solve the problem?
Spain’s new housing law, which recently came into force, has tried, in part, to tackle the issue of empty housing.
READ ALSO: What are Spain's plans to charge owners of empty homes more tax?
Local councils now have the power to implement a surcharge of up to 150 percent on the property tax (IBI) quota for all those owners who have had an empty home for two years without just cause.
If the property has been empty for three years, the surcharge could reach 100 percent, and there could also be an additional 50 percent rise in the case of properties whose owners have two or more flats in the same municipality.
The government is hoping this will force many empty properties back on the market.
In early 2023, the Valencian government also introduced an extra tax on empty homes for landlords who own more than 10 properties, which could include developers. This will affect properties that are not up for sale or rent and have been empty for six months or more. In this case, they will have to pay monthly fines.
Back in 2021, the Basque Country also contemplated a similar plan to introduce economic sanctions on empty properties in the region. The mere threat of these fines, however, has seen the number of empty properties in the Basque Country fall by 25 percent.
Join the conversation in our comments section below. Share your own views and experience and if you have a question or suggestion for our journalists then email us at [email protected].
Please keep comments civil, constructive and on topic – and make sure to read our terms of use before getting involved.
Please log in here to leave a comment.