Spain is seeing the first signs of improvement in the house-building sector for the first time since the financial crisis hit in 2008. David Pollard reports.
Listen carefully, and you'll hear something that hasn't been heard very much for some time on Madrid's building sites. A cement mixer. It's a small sign of a big change for what - before the financial crisis - was one of Spain's trophy industries. Construction is making a comeback. And it's a buyer's market, says Juan Jose Perucho of property firm Grupo Ibosa. SOUNDBITE (Spanish) HEAD OF THE REAL ESTATE COMPANY GRUPO IBOSA, JUAN JOSE PERUCHO, SAYING: "These apartments, which we started to build around a year ago, cost about half of what a similar apartment would have cost four or five years ago. That's because the price of land has dropped enormously, 50 to 60%, and the cost of construction has also dropped - while the quality of builders has improved." At the peak of a decade-long building bonanza, Spain was putting up more houses per year than Germany, France and Italy combined. The financial crisis left nearly three quarters of a million new homes unsold, hard to shift where demand was weak. Banks still have over 160 billion euros of homebuilder debt weighing on balance sheets. They're cautious on lending again. But it is happening. Mikel Echavarren is CEO of property consultancy, IREA. SOUNDBITE (Spanish) CEO OF REAL ESTATE CONSULTANCY IREA, MIKEL ECHAVARREN, SAYING: "Today the risk of losing one's job is much less than two years ago, the perception is that prices have hit rock bottom and finally, for the last year and half, two years, some banks have a clear intention to finance clients. All these factors contribute to an increase in demand and comparatively, as we are coming out of a bad situation, the statistics show improvement, a trend that will continue to improve." It's got a long way to go. The construction industry accounts for about a twentieth of Spain's output - half of what it was in the boom years, with about half the workforce. Mortgage approvals are at less than a tenth of their pre-crisis peak. But a majority of Spaniards own their homes - and that's a tradition that should provide a solid foundation for the industry's future.