The housing sector has experienced various transformations in recent years, such as the change in bank credit policies or the emergence of alternative models to purchasing. This represents a series of new challenges and also opportunities that are worth studying in depth.
Among the main changes experienced by the sector, we must mention the change in the policies for granting developer credit, as a consequence of the real estate crisis of 2008. After the restructuring of the banking system, the conditions became stricter, although – as pointed out the study – “we must talk about banking prudence and not credit restriction”, since promotions considered reliable continue to be financed. These changes have led to a reduction in the leverage of sector promoters, which has ultimately contributed to greater financial security. After the crisis, the number of operating companies was reduced by approximately half. Those that survived were “those that were healthier and, currently, have a higher degree of professionalism.”
Another substantial change is the role that public administrations play in the promotion of residential housing. Today, four out of five affordable homes are built by private developers. Collaboration between them and the public sector is essential to counteract the lack of affordable housing. But these mixed formats encounter difficulties such as the fact that the construction cost exceeds the prices of the modules, in addition to the lack of development of developable residential land, especially in areas with the highest concentration of population.
The Spanish model has traditionally been based on promotion aimed at sales. But the increase in prices, less access to credit due to lack of previous savings and changes in consumer preferences have directed demand towards rentals. In 2020, 17.3% of homes were rented, compared to 10% in 2001. However, the repercussions of rent control in the Housing Law (Law 12/2023) have negative consequences on this type of home. offer.
According to the policy brief, the low economic impact that COVID-19 has had over time is an example of the change in the competitive structure, strength and quality of financing in the sector. In the short term, the stoppage of construction activity resulting from the restrictions did have certain repercussions. In the central months of the pandemic, there was a reduction in occupancy, new construction visas and sales of approximately 30%. But, as of May 2021, a general recovery was observed. However, the decrease in activity did not lead to a drop in house prices, which reflects a solid position of households.
Despite the aforementioned changes, which have contributed to the resilience of the sector, it continues to present certain vulnerabilities that will have to be addressed soon. One of the main ones is the increase in raw materials, which, since 2021, impacts construction materials.
Currently, the volume of real estate supply is insufficient in areas with a high concentration of population and economic activity due to the lack of final land. The unequal territorial distribution in Spain has contributed to tense the market. There is a lack of housing supply on the Mediterranean coast and large urban centers, such as Barcelona and Madrid, which bring together more than 60% of the population and 96% of the creation of new homes. All of this is part of the trend of relative weight of new housing in the set of transactions.
On the other hand, the destruction of the productive fabric has meant that the population that enters the labor market does not opt for working in construction. Today, 70.8% of workers are between 30 and 55 years old; and, according to the study, a trend towards progressive aging is detected, another of the weaknesses of the sector. In May 2022, a year-on-year increase in construction costs of 19.5% was also recorded, representing a cumulative increase of 37.6% in the last 10 years. This is especially worrying when we talk about the promotion of protected housing.
As Mia Torner assures, all the weaknesses that we have just pointed out require “a transition towards industrialization and digitalization.” Josep Maria Raya, for his part, points out that the study reflects “the change that has occurred in the sector during the last 15 years and the conditions that have led us to the current situation, in which demand greatly exceeds production. and stresses the markets, especially the rental market.”
To reverse these tensions, the report proposes developing residential land where it is needed, especially in the metropolitan area, to avoid a situation of collapse. The difficulty in developing new urbanizable sectors, as well as the long execution times, cause a lack of land to build in places such as the metropolitan area of Barcelona.
As Marc Torrent, general director of APCE, explains, public-private collaboration is a “fundamental tool to increase the affordable and social housing stock. Therefore, housing policies are needed that encourage this type of formula and that have a sufficient budget allocation to bring us closer to the main European countries.”
Finally, the policy brief highlights the need to renew the built real estate stock to meet new requirements such as energy efficiency. The sector must therefore move towards sustainability and updating aging homes. Industrialization can be, in this mission, a good ally, since it allows greater control of waste emissions and recycling.
The study ultimately provides a revealing “photograph” of the current state of the real estate sector, which has strengths and points for improvement. At the same time, it offers some possible solutions to continue moving towards an increasingly solid housing industry, which manages to harmonize economic growth with the capacity to respond to the demands and needs of citizens.
