Before the property bubble burst in 2007 almost 14% of the Spanish workforce were employed in the construction industry.
Pre 2007 the industry provided 2.8 million jobs, 13.5% of the total Spanish workforce. Post 2007 over half of those jobs have been lost bringing the total number of construction employees down to 1.4 million, or 7.8% of the workforce.
Losing half the jobs in a single industry has a huge affect on the economy as a whole. New constructions have all but disappeared and, with an extra 1.4 million workers unemployed the new government are likely to struggle to keep up with the growing benefits bill.
The construction industry of course depends on the demand for property and with the current demand being so low, and with such low investment in the industry, the situation is not likely to change too soon.
Since the bubble burst house prices across Spain have fallen by around 30%, a huge drop. Despite low prices and record tourist numbers the industry is still slow and, in my opinion, is not likely to improve this year. Some agents did report a slight increase in sales in the second and third quarter of this year showing some signs of recovery but this seems to have been short lived and numbers have dropped once more.
I can’t see any real changes coming until the Euro zone is a little stronger and that is not likely to happen in 2011. Uncertainty in Europe is keeping investors away meaning prices may fall a little further. If confidence doesn’t return soon the market is in danger of collapsing completely.