Spain's housing prices: the numbers behind the squeeze

New construction went from more than 865,000 permits in 2006 to 34,288 in 2013, a 96% drop in five years. With output at rock bottom, any demand pressure runs into a housing stock that is barely growing.

Housing in Spain has had the same underlying problem for years: very little is being built. New-build construction permits, the approval required before a building can go up, set the pace of the sector years in advance. And that series tells a very specific story.

## From the 2006 record to the 2013 floor

Back in 1998, more than **500,000 homes** a year were already being planned. The figure kept climbing until it peaked in **2006**, when more than **865,000 permits** were issued in twelve months. That was the height of the bubble.

Then came the collapse. Between 2008 and 2013, construction volume fell by **96%**. The historic low was reached in **2013**, with barely **34,288 permits** for the entire country. Five years to go from one extreme to the other.

## The demand that arrived afterwards

While the cranes disappeared, Spain was receiving population at an unprecedented rate. The country saw the largest influx of foreigners in its history during that same period. More people looking for a home on top of a housing stock that had stopped expanding.

The result is a mismatch that shows up in prices. No chart is needed to see it: where new supply is scarce and demand keeps up, sellers hold out on price.

## What is pushing prices up

Some point to the banks as the main culprit behind rising costs, and also to the state and local councils through taxes and planning law. These are factors that make every development more expensive before the first brick is laid.

Output remains far below the levels of two decades ago. With permits so low for so many years, the housing stock grows slowly and any increase in demand translates into pressure on existing prices.

This is general information about the residential market, not financial or real estate advice.