HE 41% of home and property builders (residential and non-residential) already risk of non-payment as a result rise interest rates. According to data from Insight View, an Iberinform platform, the indicator represents a two percentage point worsening compared to 2022 values. The effects of the sudden slowdown in sales as a result of rising mortgage prices are already being seen. The slowdown in demand due to the increase in bank loans, the loss of dynamism of new construction visas and the impact of price changes in construction materials on trade margins are a disastrous cocktail for the construction industry, which is accustomed to negative situations.
Latest macroeconomic data confirms this decline in investments construction industry. It contracted by 2.2% compared to the previous three months. While the largest decrease occurred in non-residential construction (-3.3%), there was also a significant decrease in residential construction (-0.9%).
The increase in interest rates is The main reason for the pause in real estate demand. After ten consecutive increases, and despite the pause in rates approved by the European Central Bank, the cost of financing has risen rapidly. It is already possible to see discounts on housing offers on some real estate portals. Homeowners with high mortgage burdens are experiencing problems.
It is among the top six provinces in the sector in terms of size. Balearic Islands experience biggest deterioration in credit riskIt affected 60% of construction companies (eight points more than a year ago), followed by Malaga (54%), Madrid (45%), Valencia (44%), Barcelona (41%) and Alicante (38%). watched.
According to Iberinform’s research, 51 percent of companies in the sector are under 10 years old. The report acknowledges that “age is a significant factor in credit risk”: 50% of companies in the top ten years are at the maximum or high default level. This rate drops significantly to 31% among companies between 11 and 25 years old. It is 29% among those aged 25 and over.”
The average lead time, which shows the days that stocks remain in the company, was 434 days in 2013 and is now 127 days. a gradual decrease over time. The data also concludes that the sector is experiencing strong atomisation, with 96% comprising micro and small businesses. Trading margins fluctuate somewhat, from the 4.7% they ran in 2019 to the 3.4% they closed in 2022. This trade margin is expected to narrow further in 2023.