2023-10-31 20:13:33
He 41% of home and property builders (residential and non-residential) are already in risk of non-payment as a consequence of the rise of the interest rates. The indicator represents a worsening of two percentage points compared to the 2022 values, according to data from Insight View, an Iberinform platform. The sudden slowdown in sales as a result of rising mortgage prices is already having effects. The slowdown in demand due to the rise in bank credit, the loss of dynamism of new construction visas and the impact of price variations in construction materials on commercial margins are a disastrous cocktail for a construction sector accustomed to to adverse situations.
The latest macroeconomic data confirm the fall in investment in construction sector. It contracted 2.2% compared to the previous three months. The biggest drop came from non-residential construction (-3.3%), although there was also a notable decline in housing construction (-0.9%).
The rise in interest rates is main cause of the stoppage in real estate demand. After ten consecutive increases, and despite the pause in the rate of increases approved by the ECB, the cost of financing has skyrocketed. It is already possible to see discounts on housing offers on some real estate portals. Homeowners with high mortgage burdens are having problems.
Of the first six provinces in the sector by size, The Balearic Islands present the greatest deterioration in credit riskaffecting 60% of its construction companies (eight points more than a year ago), followed by Málaga (54%), Madrid (45%), Valencia (44%), Barcelona (41%) and Alicante (38%).
According to the Iberinform study, 51% of companies in the sector are less than 10 years old. The report recognizes that “age is a relevant factor in credit risk: among companies that are in their first decade, 50% are at a maximum or high level of default. This percentage falls significantly, to 31 %, among companies between 11 and 25 years old and 29% among those over 25”.
The average supply period, which shows the days that stocks remain in the company, is currently 127 days, compared to 434 days in 2013, which shows a progressive reduction over time. The data also concludes that the sector suffers a strong atomization, with 96% of the fabric made up of micro and small businesses. The commercial margins show some volatility, ranging from the 4.7% with which they worked in 2019 to the 3.4% with which they closed in 2022. It is foreseeable that this commercial margin will constrict even more in 2023.
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