Spain has a problem with access to housing because the rate of creation of new homes is much higher than the supply, warns the Bank of Spain. The housing deficit is growing rapidly and will reach 600,000 by the end of next year. It is a figure much higher than the 184,000 affordable ones that the Government aspires to build and accounts, as explained by Ángel Gavilán, the general director of Economy and Statistics of the institution, of “the magnitude of the problem.” The needs are concentrated in five provinces: Madrid, Barcelona, ??Valencia, Málaga and Alicante.
These calculations are included in the housing chapter of the Bank of Spain’s annual report, presented this Tuesday along with the one dedicated to employment, which includes some requests, such as defining the causes of objective dismissal. The housing imbalance is aggravated by the unsold stock from the last crisis and the high number of empty units, which their owners cannot sell for different reasons. Between them, there are 850,000 in urban areas.
“It is a problem that has been accumulating in recent decades and, given its magnitude, requires the involvement of all administrations and public-private collaboration,” Gavilán stated when presenting the report to the press. The current rate of construction is 90,000 homes per year and, in view of the speed at which new homes are created, it would be necessary to expand the available stock by 1.5 million units in just ten years.
To calculate the housing deficit, the report takes the difference between new residences and the creation of households, which increase thanks to immigration and the fact that cohabitation units are becoming smaller. Between 2022 and 2023, a deficit of 365,000 units has been generated, to which an additional deficit of 225,000 will be added for the years 2024 and 2025.
The key to this large figure is that the creation of new homes is skyrocketing. If in 2015 there were 50,000, in 2022 and 2023 the figures have been an average of 275,000 per year. The forecast is that this pace will continue and at least 1.2 million will be created in ten years.
The strong housing deficit can be partially alleviated with other elements. The Bank of Spain estimates that there are 450,000 new homes pending finding a buyer. It is a still high figure and comes mainly from the previous economic crisis, in which an idle stock of 650,000 was reached.
The new housing that is built, he affirms, could satisfy 40% of the expected demand and largely solve the problem. This percentage varies greatly by region and, in the case of Catalonia and the Valencian Community, it would be between 25% and 30%.
The report also estimates the housing stock in Spain at 27 million, of which 19.3 million are main homes and another 7.5 million are distributed among second homes, unoccupied homes, tourist rentals and seasonal rentals. It also alludes to the scarcity of available land and the increasing cost of labor in the construction sector.
To put empty homes on the market, Gavilán cites measures such as rehabilitation, the development of rental insurance that gives confidence to the owners and, in a novel way, “some mechanism for their transfer to the public administration as a concession so that manage the rent.”
Regarding housing prices, the report does not offer forecasts, but it does estimate the revaluation since 2014 at 56%. They are 2% below the 2007 maximum, although the comparison was made in real terms, taking into account the revaluation of income, the percentage is 28% lower.
The Bank of Spain’s proposal also analyzes the rental market and includes some criticism regarding price controls, which “can generate undesired effects.” “Tenant protection measures can end up having more intense negative effects precisely on the most vulnerable groups, who are expelled,” adds Gavilán.
An example is that of tourist apartments. Its limitation has not increased conventional rentals, but rather seasonal rentals. “Supply is reduced in the medium term while in the short term there is a shift from the most regulated segments to the least regulated,” says the director of the Bank of Spain.
There is now a rental market of 3.6 million homes, 50% more than in 2007, and the figure is increasing. The increase responds in part to the fact that, according to calculations by the Bank of Spain, buying to rent offers a much higher profitability than that of the Ibex or public debt. In gross terms, it reaches 10.5%, and also enjoys “favorable tax treatment.”
Meanwhile, people who live rented in Spain make a much greater effort than in other European countries. 40% of rental homes are in this situation, twenty points above the EU average. “Spain stands out as the European economy where the highest percentage of people residing in the rental market is at risk of poverty or social exclusion,” the report states.
The Bank of Spain is also in favor of changing housing taxation to improve the supply, especially of empty houses. His proposal consists of raising the IBI and reducing the taxes associated with the acquisition, although he recognizes that “it would not have immediate effects” and could even, at first, raise prices.
The other chapter of its annual report presented today is employment. In it, the Bank of Spain demands a review of the objective causes of dismissal to avoid high litigation and is in favor of extending working life.
He also warns that a possible increase in Social Security contributions will harm employment. For every percentage increase of one point in contributions, the number of employed people decreases by 0.25% after four years. It is a warning to the Government, which could be forced to increase this burden to guarantee the sustainability of pensions.
The report also confirms an increase in salaried public employment of 340,000 people in four years. It is growing faster than private employment and is already equivalent to 16.9% of the total, compared to 16.3% in 2019, it indicates.
Meanwhile, the number of people receiving the minimum wage increases, the amount of which has increased to 1,134 euros in 14 payments. If in 2018 only 5.1% of workers received it, the percentage will be 12.7% at the end of 2024, according to the forecasts of the Bank of Spain.
To these figures and percentages is added an interesting note about the lack of labor reported by various employers’ associations. The companies that declare a lack of labor in the surveys managed by the Bank of Spain have gone from 25% at the beginning of 2022 to 42.5% at the end of last year.
