Spain | Economic, Social And Demographic Determinants Of Housing Demand

housing overvalued

BBVA Research | Since 1996, the number of homes in Spain has increased, as well as their size. This Observatory studies the contribution of different socio-demographic factors such as average household size, population growth and the number of dwellings per household to the demand and size per dwelling.

Key points

  • Before 2008, the decrease in the size of the households and the increase in the population explained most of the increase in the demand for housing. Later, although the first trend was maintained, the second was not, which slowed the advance in the sector.
  • The reduction in the number of dwellings per household has been continuous throughout the period studied, negatively affecting the growth of housing balances.
  • In the future, it is estimated that the population growth, projected by the INE, could help boost housing demand, although at a somewhat more moderate pace than in the pre-crisis expansion. The possible change in preferences, as a consequence of the pandemic, towards more surface per person in the household, could lead to an increase in the surface of the dwellings.
  • However, the expected decrease in the average size of the household could have a positive contribution in the case of demand, but negative in the increase in housing size.
  • Studying three different scenarios for a possible evolution of the number of dwellings per household, it is estimated that a convergence towards the European average would harm the demand for housing in Spain, since it would lead to the loss of relevance of secondary dwellings and tourism, although it could be transferred to increases in the average surface area per dwelling. On the other hand, more optimistic scenarios would suppose average annual increases between 120,000 and 325,000 houses per year.

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.