18 January 2018 – Cinco Días
Without exception, all of the studies currently being published about trends in the real estate market indicate that 2018 is going to be better than the previous year. Nevertheless, the experts are warning that certain risks may lie in wait for the sector.
On Thursday, the CEO of Sociedad de Tasación, Juan Fernández-Aceytuno, presented a report compiled by his company, which forecasts that: house prices will rise by 5.5% on average this year, sales will improve by 14.1% and mortgages will increase by 9.4%.
Based on those figures, it seems that the sector is set to close the year with all of its variables growing at a strong rate. And, what’s more, with no need to talk about the generation of a new bubble, for the time being, at least. Nevertheless, Fernández-Aceytuno warns that we should not lose sight of certain indicators and concrete facts that are already starting to emerge and that may be early signs of situations from the past that nobody wants to see a repeat of.
One such circumstance is the lack of skilled personnel for construction projects that is being seen now that property development has taken off again. The CEO of Sociedad de Tasación revealed that work at some sites has been suspended due to a lack of labour, which is not only going to result in delays in the hand over of certain homes, but which may also end up leading to an increase in house prices. “Most of the best professionals that were working in the previous boom cycle have retired or retrained in other areas, which is why property developers are finding it hard to find qualified personnel for their jobs”, he explained (…).
Another risk that may lead to distortions in the proper operation of the market is the paralysis of too many urban development plans, which, in turn, leads to a shortage of buildable land for the construction of new homes. “All restrictions on the supply side end up resulting in a bubble”, said Fernández-Aceytuno. For that reason, he recommends that to the extent possible and where it is clear that demand for housing exists, it is desirable that the urban development processing times be made as streamlined as possible (…).
Regarding the current situation in the residential rental market, the report from Sociedad de Tasación warns that it is possible that the high returns that are being recorded at the moment constitute an “ephemeral” bubble, given that in some areas, we are starting to see the rise in rental prices tail off, since rent is very volatile to certain factors.
One of those is the limitation on rental prices being demanded by some of the political parties, to reflect what is happening in other European cities. “We consider that in the rental market, the path to follow cannot involve imposing limits. Each owner must be free to lease his home at the price he wants to and then comply with the law and pay the taxes that he ought to”, he said. In this sense, he defended his point that with more rental properties, Spain would be a richer country, because rental favours labour mobility and constitutes a more liquid market. However, he did demand the legal security be professionalised and guaranteed so that increasingly more companies want to invest (…).
Original story: Cinco Días (by Raquel Díaz Guijarro)
Translation: Carmel Drake