BBVA Research has announced in a recent report that the “high cost of housing” has begun to be “determining” for the investor attractiveness of the Spanish economy, especially in cities where companies with high added value linked to the industry expand the most. or the service sector.
But, in a report on the situation in Spain as of November of this year, the entity also warns that it does not seem that this situation will be reversed in the short term due to several factors that prevent there being more supply than demand for housing.
Among them are the lack of developable land, the shortage of labor, the “insecurity” for landlords derived from recent legislative changes, which together predict that prices “will continue to increase” in an environment where the supply “will continue growing” below demand.
A focused problem
This problem is particularly acute in large urban areas and tourist centers – such as Malaga or the Balearic Islands. It is in these areas, generally with dynamic economies and with a greater number of investments, the demand for housing is much higher than the available supply, so housing prices are especially high.
According to the latest data published by the Housing Ministries, provinces such as Jaén, Cuenca, Teruel, Ciudad Real or Cáceres have had stagnant prices for ten years. On the other hand, Madrid has been the first Spanish province to exceed a price of 3,000 euros per square meter (m2) and the price gap with respect to Ciudad Real – the province with the cheapest price – is multiplied by more than four.
Similarly, the Balearic Islands and Malaga have been the provinces with the most significant price increase since the beginning of the series in 1995. Specifically, the Andalusian province has seen its price increase by 451% until the third quarter of 2023 and in 498%, in the case of the islands.
With this panorama, BBVA Research considers it necessary to eliminate the bottlenecks that may be limiting the growth of the supply of housing at excessive prices, both for rental and purchase.
Lack of supply
BBVA Research’s note on housing is framed in a section on supply problems in the industry, some services and also construction.
The organization makes a lower contribution of external demand to growth due to the environment of high energy and financial costs, the lower progress in the main trading partners and the lack of human capital.
Regarding this last point, the institution says that as the unemployment rate has reduced, companies “have found it increasingly difficult” to find workers with training in line with what they need.
This “lack of qualifications”, the document points out, could also pose “obstacles” to the positive evolution of exports of non-tourist services.