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What Impact Will the Housing Plan Have on Construction?

25 March 2018

For the first time, Spain’s Housing Plan may create incentives for private housing developments. Specifically, the Spanish government included subsidies of up to 36,750 euros per home that developers build for the residential long-term rental market in the program.

The government intends to boost the stock of residential housing in Spain, at a time when growing demand and the shortage of new housing are pushing prices up in some cities. Developers are cheering the measure, but question whether it will have a significant impact on the market.

Alberto Delgado, director of operations at Aedas Homes, noted that it is “vital to shorten the deadlines for the processing of the different licenses involved in the construction of homes and the creation of building-ready land.” In his opinion, “the delays in licensing and the shortage of building-ready land are two of the big obstacles that builders face. In a recent statement to the CNMV, the developer, which will sell 2,000 homes this year, said it took an average of six months for a construction license to be granted. In regions such as the Costa del Sol, this period can last up to eight months.

Increased costs

Neinor Homes took a similar position, stating that the measures included in the Housing Plan are unlikely “to affect the sector.” “Public subsidies can be an additional supplement, but housing sales can only fully recover if employment continues to grow and young people have the purchasing power to buy their first home,” the developer explained.

Metrovacesa affirmed that the “measure is positive”, but that there is a “need” to put “new homes that respond to the demands of citizens” on the market. Referring to the Housing Plan, the company controlled by Banco Santander and BBVA explained that “it is still early to determine its impact, although these measures always help to boost the market.”

All three companies agree that the stock of homes that the market currently has on offer is “insufficient” in certain regions. Last year some 80,000 new construction permits were granted, a figure notably lower than the 150,000 that analysts believe the market requires to respond to the overall demand.

“It’s not easy, construction costs have grown 10% in the last year. There exists a lack of contractors and labour. We have few crews, and it is not easy to train new professionals,” a real estate consultancy stated.

Original Story: ABC – G. Ginés

Translation: Richard Turner