Property Developers Expect The Housing Sector To Normalise By 2019

31 August 2017 – El Mundo

Spain’s real estate developers estimate that this year will close with the construction of around 85,000 new homes and that the “normalisation” of the sector will happen at the beginning of 2019, when new home output will cover demand (between 120,000 and 130,000 units).

That is according to the General Secretary of the Spanish Association of Property Developers (APCE), Daniel Cuervo, who said that the data regarding the evolution of the real estate market is “reasonable” and in line with expectations, both in terms of transactions and prices.

According to the latest statistics from the College of Registrars, house prices in Spain rose by 4.4% during the second quarter of 2017 and 119,408 transactions were recorded (up by 10.7%). In a statement to Servimedia, Cuervo explained that this evolution is “what was expected”, and he added that 2017 would close with 500,000 house sales, mainly (between 80% and 85%) second-hand homes.

Although the weight of new build homes is lower than that of second-hand homes, the General Secretary of the APCE said that the evolution in terms of new builds is “positive” and that production will grow by around 15,000 properties this year, up from just over 60,000 in 2016 to around 85,000 in 2017.

In any case, Cuervo said that there is still a gap with respect to demand, given that the planned creation of new homes, estimated to amount to between 120,000 and 130,000 per year, exceeds production. Therefore, “there is still scope to continue building”.

The real estate world “has learnt its lesson”

The General Secretary of the trade association believes that the “normalisation” of the market, with similar levels of supply and demand, will be reached within two years, by the beginning of 2019.

Cuervo highlighted the need to achieve and maintain a “reasonable” output of housing, understood as a “sustainable” increase that may be “assumed” by demand and that “goes hand in hand with the growth in people’s wealth”.

In this sense, he says that the sector “has learnt its lesson” and is not planning to build homes that it cannot sell, and that the industry has to adjust to demand to “avoid generating stock that nobody wants”.

Original story: El Mundo

Translation: Carmel Drake