Article published by Estefanía Díaz Rivarola in the September 2018 issue of La Gaveta Económica.
Canarian Economy Papers is a collection of socioeconomic studies on current issues on the islands. Thanks to the collaboration of the DISA Foundation, Corporación 5 will soon present the fifth edition of Papeles de Economía Canaria, titled “Housing in the Canary Islands”. One of the main conclusions of the study is that There is a great imbalance between the supply and demand for primary housing in the Canary Islands and which, according to forecasts, will tend to increase progressively.
According to the INE, in 2017 there were a total of 834,000 homes in the Canary Islands and in 2031 they will increase to almost 950,000. Households make up the majority of the demand for primary housing in the Canary Islands, although there is also another component of demand that guarantees the flexibility of the housing market. From the sum of both components we obtain the potential demand for main housing in the Canary Islands, ranging from 875,000 homes in 2017 to almost 997,000 in 2031.
Regarding supply, the Ministry of Development provides an estimate of the housing stock in the Canary Islands. In the study, a projection of the supply is made until 2031 assuming two hypotheses: that the average rate of creation of total homes over the last 5 years remains constant and also the average percentage that the main homes have represented over the total homes in the last 5 years. With these data and under these assumptions, it is obtained that the main home offer In the Canary Islands in 2017 it was about 854,000 homes and in 2031 it is expected to rise to almost 856,000.
As can be seen, supply was already below demand by around 21,000 units in 2017 and, if homes are not created at a greater rate than expected in the coming years, the main home gap will increase to exceed 140,000 homes in 2031.
In the projections made, some risks have not been taken into account, such as the possibility of changing the use of part of the main homes to dedicate them to vacation rentals. In such a case, the supply of main homes would be even lower than estimated and the problem would become more pronounced. However, even without considering the future effect of vacation rentals, the report shows that The weakness of the Canarian housing market is not based on a demand problem, but rather a supply problem: the low rate of housing creation. This pace does not allow us to meet the needs of demand or guarantee the availability of homes in different areas and typologies for those who wish to change homes.
According to our estimates, between 2019 and 2031, about 1,100 total homes will be created per year, only 8% of those needed to reach equilibrium in 2031. And if balance were to be reached in 2022, about 22,000 homes would have to be built annually for 5 years to achieve a solution. Taking these calculations into account, between 15,000 and 22,000 total homes should be built per year in the Canary Islands if we wanted to respond to the current and future needs of resident households. However, even trying to tackle the problem in the shortest possible time, the long terms typical of the sector of construction, along with the inconveniences that can be caused by excess bureaucracy and the complexity of territorial planning, are factors that directly affect reaction time facing the problem of shortage of main homes in the Canary Islands.
