The lack of new construction is one of the main problems of the Spanish real estate market. According to the real estate portal "Pisos.com "this problem, which has worsened since the beginning of the pandemic, will only strengthen in 2023.
In view of this, Ferran Fond, Director of Research at Pisos, draws attention to the latest report on the residential real estate market from the National Institute of Statistics (INE), released in November. According to INE data, only 18% of all operations on the market for the specified month were in the segment of new buildings. This share is the result of a slowdown in this market for three months in a row. The annual drop in the end was 3%. At the same time, the secondary real estate market is only gaining momentum.
Market experts also point to the data of the Supreme Council of the College of Architects of Spain (CSCAE). According to them, in 2022, 2% fewer square meters of new housing were approved than in 2021. We are talking about approximately 33.3 million square meters. This is due to the increasing production costs last year: expensive energy, building materials, labor.
Last year turned out to be difficult for the Spanish construction sector. In addition to the previously mentioned problems, the market faced a distribution paralysis, a shortage of new land for construction, and a drop in the purchasing power of the population. At the same time, although prices are not falling according to the most pessimistic forecasts for the beginning of 2023, a slowdown and decline in prices are still observed throughout the country.
It is worth pointing out that most of the new construction projects are largely carried out on the basis of high pre-sales of future facilities. This approach makes it necessary to take into account economic factors and potential production costs in the long term.
And this, in turn, has a big impact on small developers. Last year was marked not only by the problems listed above, but also by pessimistic forecasts and an extreme degree of uncertainty in the future of the market. For small companies, it is especially difficult to take into account factors in the long term, besides, they will suffer much more from miscalculations than their older "too big to fall" colleagues. And this, in turn, also forces developers to freeze current projects and reduce the number of new launches.
There are two main problems in the prospects for the development of the market of new buildings in 2023:
- Somehow it is urgently necessary to increase the number of skilled workers;
- Streamline administrative procedures, which will significantly reduce uncertainty in the economy, as well as simplify the processes of buying, for example, new land for construction.
If we talk about the possibility of solving the problem with the shortage of new housing, then Spanish developers need to maintain the pace of 150,000 new objects per year.