The problems affecting the real estate sector have forced the closure of 15% (162) of Tecnocasa's estate agency outlets since last December.

As well as a marked decline in property sales, the sector is also being disadvantaged by the reality that it is now taking, on average, 112 days to sell each property, a full eighteen days longer than at the start of 2007.

30% estate agencies set to close before year end
By: thinkSPAIN
Monday, October 8, 2007

According to the president of the Network of Housing Experts (REI), Eduardo Molet, three out of every ten real estate offices in Spain will close before the end of this year, and more than 35% of those that survive will struggle in 2008. In the medium term, it is estimated that a further 75% will disappear between 2009-2014.

The simple explanation for the very real crisis being faced by the sector is that fewer properties are being sold than previously: sales fell 9.8% in 2006 and the REI is forecasting a further 20% decline by the end of 2007.

There is also forecast to be a corresponding 2.5% fall in the number of new properties being built next year: by the end of 2007 alone, a total of 700,000 new homes will be built, which Mr Molet describes as "outrageous, if you compare that with other European countries: 187,000 properties are planned in the UK."

According to the National Institute of Statistics, there are currently 3.1 million unoccupied homes in Spain, and this will rise further if supply continues to outstrip demand.

At the beginning of last week, six subsidiaries of the Llanera group in Valencia suspended payment to its suppliers and financial backers, and are implementing immediate redundancies in a effort to slash operating costs.

The Don Piso real estate chain, hitherto considered to be one of the stars in the sector, has already closed 26 of its 363 officers, laid off staff and trimmed its publicity budget. A spokesman for the company said that demand has fallen 75% and blames banks and building societies "who are no longer offering new buyers 100% mortgages plus purchase costs."

For their part, Fincas Corral may already have closed half of the 350 offices with which it started the year, according to a recent article in the 'Cinco Días' economic daily.