The managing director of Business of Aguirre Newman, Ángel Serrano, believes that the housing prices in Spain should fall an additional 20% or 25% in order to adjust to the buying capacity of the demand and points out that this percentage could be even higher if the “wage shock” suffered by workers continues.
In an interview to Europa Press, Serrano explains that the equilibrium between the price offered and the buying capacity of the demand lies at an effort of 4 and 4,5 times the gross salary for the acquisition of a home, a proportion that currently lies at 5,7 times.
The adjustment will take place either through a descent in prices of more than 20% or through an increase in salaries, something which is not foreseeable in the current context of salary moderation.
Serrano also reminds that the market not only needs to “buffer” the weakness of the demand, which still suffers the lack of employment or of credit, among other factors, but also the disappearance in January 2013 of the tax benefit for the acquisition of a principal residence and the increase of the VAT from 4% to 10% for new homes. “All or a part of the descent of prices during the crisis has been absorbed by the end of these advantages”, he adds.
Serrano declares that it will take around 18 months before the offer and the demand meet, that is, around 2015. To go any further would be “a juggling exercise”.
He assures that the first half of the year has shown figures that “provide some optimism”, although this has not reflected on the prices in the residential sector.
As explained, the real estate sector also includes the tertiary sector, which is not given the same importance as the residential one due to its smaller volume. This segment “suffered the crisis much later than the residential one and will be out of the crisis much earlier as well”, Serrano points out.
The contracting in the tertiary segment, measured in square meters, has increased in 40% in the first half of the year, while the adjustment in the rentals has softened in these months, with a descent of 2,6%.
Serrano reminds that the residential sector is made of several “micromarkets”, several of whom have already the adjustment process and are starting to see an increase in purchases.
For this reason, he considers that “the pace of purchases will improve” in the next few months, when Sareb is also starting to get rid of its assets, as with the “operation Bull”, where it has awarded nearly 1000 properties.
However, Serrano considers that the pending issue is the international demand. “I think we need to export the commercialization of properties”, he assures, indicating that consulting firms such as Aguirre Newman have a lot to say thanks to their knowledge and experience.