This is hardly shocking news, since it was obviously coming, but it is nonetheless important. According to the latest data from the Spanish Development Ministry planning approvals fell by 57% in the period January - May , to 144,000, as compared with 336,000 in the same period last year. This is the lowest level of planning approvals since 2000. Approvals for apartment blocks were down by 60%, compared to a 43% fall in detached homes.
And the drop in planning approvals appears to be gathering pace as the year progresses, since the numbers for May were 30% down on April.
Planning approvals rose rapidly from 2000, reaching 687,000 in 2004, 730,000 in 2005, peaking at 866,000 in 2006, before falling back to 651,000 in 2007. It is hard to say what the final number for this year will be, but it now seems unlikely that it will exceed 300,000, meaning that housing construction will be running in 2009 and 2010 at something like 30% of the pace attained in 2007/08.
I think at this point we should remember the words of Jose Luis Malo de Molina, director general at the Bank of Spain who (speaking at a recent conference in Valencia) recently informed the world that the number of new homes which will be completed in Spain in 2008 will beat all previous records (that is we are building more houses than ever this year, many of them doomed to simply lie empty). Muñoz's explanation for this phenomenon is simply that “the real estate sector can’t turn around quickly, it works in the medium and long term, so this year the properties started at the end of 2005 and beginning of 2006 will be completed, which means the number of new properties on the market will hit an all time high.”
Migrants Starting To Return?
Also today we learn that the number of immigrants seeking government aid to leave Spain has doubled in 2008. The government received 2,100 requests up to July from immigrants who say they cannot afford to return home, compared with 1,184 during all of last year, and this year's funds for the subsidy scheme are exhausted, according to a spokeswoman for immigration and emigration department.
At least 4 million immigrants, mostly from Latin America and eastern Europe, have arrived in Spain since the start of the century, many of them looking for work in construction and jobs like cleaning and child care.
A total of 457,000 workers have lost their jobs over the last 12 months, giving Spain the highest unemployment rate in the European Union. Spain something over 5 million immigrants, about 11 percent of the population, and unemployment is rising three times faster among immigrants than in the wider workforce, increasing 69 percent in the past year to 266,458 registered jobless, government data show.
Bolivians, Argentines, Colombians and Ecuadoreans are leaving Spain in the greatest numbers, according to the spokeswoman. The travel subsidy scheme is operated by Spanish non-profit groups and gives each immigrant between 50 and 400 euros ($77.50 and $620) to journey home, plus 400 to 1400 euros per family. Groups such as the International Organization for Migration, the Spanish Red Cross and the Spanish Catholic Commission Association for Immigration say they have more than 2,000 immigrants on waiting lists seeking funds to return home.
The travel subsidy scheme, which has a 1.7 million euro budget, is only one leg of the current government programme to encourage immigrants to leave Spain. A further 100,000 plus immigrants are expected to leave Spain from September onwards, taking advantage of a separate programme to pay jobless immigrants anything up to two years unemployment benefit (depending on their earlier contributions) if they go home.
While I think it is essential to do as much as possible to help relieve the situation of poor migrants who are now, for no fault of their own, in distress, I cannot help feeling that this approach of simply encouraging the immigrants to leave is a big mistake. In the short term it may help ease some difficult situations, but if what is now only a trickle should turn into a flood in 2009, then Spain will be many, many years recovering from the negative GDP growth and extended property overhang which will result. Remember, all the migrants who are leaving either own or rent homes.
Spain Real Time Data Charts
Edward Hugh is only able to update this blog from time to time, but he does run a lively Twitter account with plenty of Spain related comment. He also maintains a collection of constantly updated Spain charts with short updates on a Storify dedicated page Spain's Economic Recovery - Glass Half Full or Glass Half Empty?