Post by account_disabled on Feb 11, 2024 3:27:28 GMT -6
The price of housing, both for sale and rent, does not stop growing and there are no signs that the trend is going to go down, or if anything, slow down. Because? Because there is a lack of housing to respond to real demand : used housing is not capable of satisfying said demand and new construction remains low. Real estate developers have been pointing out for years that Spain needs to build between 130,000 and 150,000 new homes a year, a pace that has not yet been achieved since the outbreak of the great real estate crisis in 2008.
During the boom, more than 120,000 construction visas were granted in a single month, specifically this occurred in September 2006, the high point of the entire historical series Australia Telemarketing Data of statistics from the Ministry of Housing and Urban Agenda. Although these data were not good and denoted an excess of new construction (it was also combined with the entry into force of the Technical Building Code, which caused an anticipation of license applications), the current situation is not healthy either: in October 2023 (latest data available) 10,612 visas were granted. To reach 150,000 new homes per year, an average of 12,500 new construction visas would need to be granted each month. Every year, 240,000 new households are created in Spain that find it very difficult to get a new home and are forced to buy second-hand homes.
“One of the objectives of the development sector is to reach a balanced point of production that meets demand. Neither reach the exorbitant numbers of 2006 nor stay at 80,000 homes in 2023,” says David Martínez, CEO of Aedas Homes.
Why is more new housing not promoted?
The Achilles heel of the sector is the lack of final land to build housing. This is detailed by the experts consulted by idealista/news, as well as the difficulty of finding finalist land. They demand more raw materials to produce the housing that society currently demands.
Below, we detail the main factors that cause there to be no more new housing on the market:
Slowness in land development : experts point out that the 2008 crisis completely paralyzed investment in land development, the most precious asset today for developers. Jaume Borràs, business director of Culmia , maintains that during the years following the crisis the available bags of finalist land were exhausted without the public administrations reactivating the urban transformation activity. The slowness in converting land suitable for building housing has generated the current “non-existence of final land in a large part of the territory in which there is demand for housing,” adds Borràs. Bureaucratic obstacles limit the supply of housing (administrations, electricity, hydrographic confederations, heritage, etc.). “All of them hinder the promotion process and slow down deadlines,” adds Luis Corral, CEO of Foro Consultores.
High land value : business plans are often not viable due to the high value of land, the result of scarcity, construction costs, which, although they have stabilized, remain in the high range, and high financial costs. . These have been placed for the developer at around 6% annually, according to Luis Corral. Furthermore, the situation of uncertainty forces the promoter to “ask” for more profitability from the projects, given the risks.
During the boom, more than 120,000 construction visas were granted in a single month, specifically this occurred in September 2006, the high point of the entire historical series Australia Telemarketing Data of statistics from the Ministry of Housing and Urban Agenda. Although these data were not good and denoted an excess of new construction (it was also combined with the entry into force of the Technical Building Code, which caused an anticipation of license applications), the current situation is not healthy either: in October 2023 (latest data available) 10,612 visas were granted. To reach 150,000 new homes per year, an average of 12,500 new construction visas would need to be granted each month. Every year, 240,000 new households are created in Spain that find it very difficult to get a new home and are forced to buy second-hand homes.
“One of the objectives of the development sector is to reach a balanced point of production that meets demand. Neither reach the exorbitant numbers of 2006 nor stay at 80,000 homes in 2023,” says David Martínez, CEO of Aedas Homes.
Why is more new housing not promoted?
The Achilles heel of the sector is the lack of final land to build housing. This is detailed by the experts consulted by idealista/news, as well as the difficulty of finding finalist land. They demand more raw materials to produce the housing that society currently demands.
Below, we detail the main factors that cause there to be no more new housing on the market:
Slowness in land development : experts point out that the 2008 crisis completely paralyzed investment in land development, the most precious asset today for developers. Jaume Borràs, business director of Culmia , maintains that during the years following the crisis the available bags of finalist land were exhausted without the public administrations reactivating the urban transformation activity. The slowness in converting land suitable for building housing has generated the current “non-existence of final land in a large part of the territory in which there is demand for housing,” adds Borràs. Bureaucratic obstacles limit the supply of housing (administrations, electricity, hydrographic confederations, heritage, etc.). “All of them hinder the promotion process and slow down deadlines,” adds Luis Corral, CEO of Foro Consultores.
High land value : business plans are often not viable due to the high value of land, the result of scarcity, construction costs, which, although they have stabilized, remain in the high range, and high financial costs. . These have been placed for the developer at around 6% annually, according to Luis Corral. Furthermore, the situation of uncertainty forces the promoter to “ask” for more profitability from the projects, given the risks.