Spanish regional housing markets show divergent construction trends

The Spanish housing market shows diverging trends in the regions of Navarra and Extremadura. In Navarra, residential construction is seeing a significant acceleration. Between January and July, 1,953 new homes were started, marking a 22.7% increase compared to the previous year and reaching a 15-year high for this period. Of these, 1,409 are free-market homes and 544 are protected housing (VPO or VPT). Approximately 70% of this activity is concentrated in the Pamplona region.

Conversely, Extremadura is facing a severe imbalance between housing demand and supply. Since 2021, the region has created over 15,000 new households but completed fewer than 8,000 homes, averaging only 53 new houses for every 100 households. Javier Peinado, Secretary General of CREEX, attributed this gap to a 40% increase in construction costs driven by inflation and the economic impact of the war in Ukraine. Additionally, rising costs have made the price caps for protected housing unviable for private developers, shifting the burden of social housing construction to public entities. Stricter credit requirements and the need for high pre-sale volumes are also hindering smaller developers.