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The rain in Spain

Our problems are man-made, therefore they may be solved by man. No problem of human destiny is beyond human beings.

Where’s it going to end? First Connaught and now Rok, the latest high-profile building services company to go to the wall. The repercussions of failures such as these stretch far beyond the hundreds of job losses – the administrator announced 755 to go at Rok just this morning. As our story on Monday shows, the amount of money owed to trade suppliers and merchants is often far more than at first seems.

So, in the light of this, I was running my eye over the list of email alerts in my inbox when the flowing headline caught my eye “Government sees light at end of tunnel for residential construction, builders merchants see oncoming train.”

It was a story on the state of the Spanish market, on the website Spanish Property Insight. It said that the Spanish finance minister Elena Salgado claims that, the glut of new homes – which has been doing so much to impede the Spanish economic recovery – stopped growing in the first half of the year, and will fall by 20% next year as resurgent demand already “showing signs of recovery” begins to mop it up.

There were around 690,000 unsold new homes in Spain at the end of 2009, so, even if Salgado is right, there will be 550,000 by the end of next year – still a major obstacle to recovery. And apparently, new home sales are now greater than the number of new home starts. Meaning, in theory, that the glut will reduce.

But that’s not how the Spanish builders merchants see it. Of course the number of sales is out-stripping starts – housing starts are 90% down on what they were at the peak. Rafael Fernández, head of the building suppliers association Cepco, believes that the construction sector “still hasn’t touched bottom in 2010,” and 2011 will be worse.

“Cepco forecast less than 100,000 housing starts this year, and 230,000 construction completions. In 2011 they expect even fewer housing starts and less than 200,000 construction completions.

Buy they do see some glimmers of hope. For example, the stock of homes for sale in Madrid is “relatively small” and a potential recovery in demand for second homes from France and Germany.

So on the bright side, Cepco think the sector might touch bottom in 2011.”

So, anyway, I thought it was interesting to show that we aren’t the only ones who are struggling with a government that seems to have a different view on the recovery. There’s always someone/some country where the problems are the same or worse.

And that brings me neatly onto Ireland. The black hole that the Celtic Tiger ran headlong into is in danger of swallowing every cent of tax paid by every person for the next three years, according to a leading economist.

Ouch. I would not like to be dependent on the Irish construction or property industries for my bread and butter.

Spanish Property Insight, from which some of this information is taken, is a property information website run by Mark Stucklin, author of the Spanish Property Doctor Column in The Sunday Times. http://www.spanishpropertyinsight.com

About Fiona Russell-Horne

Fiona Russell-Horne
Group Managing Editor across the BMJ portfolio.

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