Strong home development and falling supply are most likely to support cost development
On the other hand, structural development in the variety of families will support the realty market over the coming years. Due to strong home thinning, the variety of families is increasing quicker than population development, which supports the need side of the realty market. Over the previous twenty years, more than 20 million families have actually been included, a 70% boost. In between 2002 and 2012, the variety of families increased especially greatly with a typical yearly development rate of 2.4%. The development rate has actually slowed to approximately 0.4% annually over the previous years, however has actually continued unabated.
In the years ahead, home development will continue to support the realty market. INE projections that the variety of families will increase by 1.1 million by 2035, a 5.3% boost in 13 years. This is generally due to strong development in the variety of single and two-person households. These 2 groups are anticipated to grow by 16% and 11%, respectively, while the variety of families with more than 3 individuals will diminish by about 5%. Spain currently has a high percentage of flats (66%), compared to, for instance, France (34%), Italy (55%) and Portugal (46%), however this percentage is most likely to increase even more over the next years driven by a growing variety of songs. In 2035, single individuals will represent 29% of all families, up from 26% in 2022 and 20% in 2002.
Furthermore, supply is increasing less quickly than the variety of families, which naturally puts upward pressure on costs. In between 2011 and 2021, the variety of families increased by 5.4%, while the real estate stock increased by just 2.9% over the very same duration, according to figures from the Ministry of Transportation. For this year and next, we anticipate an additional decrease in building volumes, which will put extra pressure on the home market. The sharp increase in the expense of structure products puts an additional brake on building activity. Production levels are presently more than 20% lower than prior to the Covid pandemic and we anticipate the sector to diminish for the 4th year in a row. For next year, we anticipate some limited healing. The upward pattern in expenses appears to have actually slowed. In addition, the Spanish building sector will see some favorable results from financial investments in the EU healing funds. However, the variety of families is likewise anticipated to continue to grow faster than the home supply in the coming years, sustaining cost development.
