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Typical Spanish propertyAccording to local Costa del Sol newspaper, Euro Weekly News, the Spanish Institute of Family Policy has recently stated that the number of households in Spain has increased by 50 per cent since 1991, whilst the average number of family members has dropped from 2.6 to 2.3 (-11.5 per cent) during the same period.

Historically in Spain, many children lived with their parents until they married and many even for some time after that. The country also has a very strong tradition of home ownership, with residential tenancy being rare, principally due to laws biased very much in favour of the tenant, thus discouraging investment ownership of residential property.

During the 1990s and the early years of the 2000 millennium, credit in the form of mortgages and HP finance became more readily available greatly increasing demand for housing, and was one of the sparks to set off the housing ‘boom’. As property prices and their valuations rose, parents who had little or no borrowing on their houses, were able to obtain mortgages and thus provide deposits for their children, who in turn obtained mortgages in order to buy and furnish their new houses. With the influx of foreigners, the availability of divorce and an increasing culture of independence, the creation of new ‘households’ continued and thus fed the demand for housing.

Unfortunately, many of the new households could only afford their properties with the support of parents and/or by increasing income with both husband and wife working. The optimism of the time saw all parties, borrowers and lenders, building financiers and contractors, working from the premise that demand and values would continue upwards forever. However, the economic world is not like that and, entirely predictably, too many properties were built, far exceeding potential demand and, in parallel, external forces led to an economic slowdown with many borrowers being unable to meet their commitments. That has led to banks being stressed by the failure of individuals and companies to repay their loans, which may have been negligently researched in the first place, and thus we are now in the downward spiral of reduced income and asset value, resulting in a shortage of capital and economic insecurity nationally, reflecting similar problems worldwide.

Going back to the Spanish institute’s statistics, they’re interesting in showing that the number of households has increased by 50 per cent whilst the average number of family members in each household has only dropped by 11.5 per cent. One would have expected the drop to be triple that to match the number of new households. The numbers can only be explained by there being a significant increase in population over the time period, with some of the new households being large and balancing the number of single and couple households that have been created.

Campbell D. Ferguson, FRICS, is a chartered surveyor in Spain. His company, Survey Spain Network arranges valuations and surveys by RICS chartered surveyors anywhere in mainland Spain and the Balearic and Canary Islands, and Gibraltar. This includes valuations, building surveys, structural surveys, building inspections and investment and development appraisals.

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