A study by the Bank of Spain recommends that the Executive “review the procedures for managing land that can be developed” to try to lower the price of housing in Spain. Its current high cost is attributed to the “mismatch between supply and demand”, in a diagnosis that largely coincides with the postulates of the PP’s housing policy. In the study The mismatch between supply and demand for housing and its relationship with prices, carried out by Lucio San Juan, analyst of the issuing bank, and published in its latest economic newsletter, it is pointed out that the real estate market Spanish is characterized by a shortage of supply and a strong demand and that both factors have worsened after the pandemic, a fact that will neutralize the cheapening that may cause the rise in interest rates.
In fact, the study points out, an increase in the mortgage rate of one percentage point will reduce new construction visas and home sales by 11% initially and around 3% after two years, but it would have “an effect of a lower magnitude in the case of prices (a little less than 2% after two years)”.
The study attributes the resistance to falling prices, along with demand, to the profile of the buyer, which it defines as “high-income households, middle-aged (between 30 and 49 years old) and higher levels of education” that do not they depend excessively on credit to buy and who also accumulated savings during the pandemic. On the other hand, an increase in the number of households due to the increase in immigration will also be added to this effect in the coming years.
After covid, however, demand has increased and purchases by foreigners have skyrocketed (in 2022 they were 40% higher than in 2019), because second home purchases have added those who have settled in Spain to telecommute, while there has been an increase in national buyers looking for different homes (larger and with outdoor spaces).
At the same time, the offer has been reduced due to a decline in housing construction – although it was already low before the pandemic – because during the confinement works were temporarily stopped and processing was delayed of visas Thus, the study points out, completed homes were reduced by 5% in 2022, to 80,000 units, well below the construction that took place during the previous thirty years, in which the average exceeded 240,000 homes in the year.
In addition, this study points out, the supply is also down because since 2021 there has been an increase in the number of owners who have decided to dedicate their homes to tourist uses.
