The construction companies on the Spanish stock market are in free-fall after the penny dropped recently about the lack of sales in Spain.
Locally, one can point to ‘land grabs’, ‘condemned houses’, ‘off-plan homes’, greedy commissions (up to 50% in some cases – you will have seen their brightly decorated cars), unfinished homes, mortgaged homes and other frauds. Sales to foreigners being one area where we have seen a fall over this time last year.
Sales to British buyers across Spain, incidentaly, have been running at around 70,000 per year.
The larger picture is, of course, the extreme increase in house prices nationally, with an average annual increase of around 20% - which has now been proven unsustainable in the long run.
The first construction company to ‘wipe a billion euros’ off its books in one day, on Monday this week, was the Valencian constructor Astroc. Others immediately followed suit.
According to a recent report, the building companies are hocked to the banks for 250,000 million euros (December 2006) – which is the equivalent to 25% of the PIB (GNP). Some 30% more homes are being built that are being bought, according to ‘Ahorro Financial Corporation’, putting at immediate risk some 200,000 jobs.
Locally to the Baja Almanzora, it will be interesting to see which Estate Agents are here for the long picture - 'in good times and bad' - and which were just after some fast money.