The problem of «emancipation» of young people on their way to buying their first real estate is a structural problem that Spain has been dealing with for many years. According to the latest data published by the Spanish Youth Council, only 17.3% of the population aged 16 to 29 years are «emancipated», that is, they have enough freedom and opportunities, primarily financial, to purchase their first home. This is the lowest figure in the last three decades.
Both labor market participants and representatives of the construction sector have long been calling on the governments of the Autonomous Communities (AС) of Spain, as well as the central government of the country, to develop assistance programs for young people in acquiring their first housing.
At the recent real estate exhibition «SIMA 2022» in Madrid, Juan Antonio Gomez-Pintado, president of the Association of Developers of Spain APCE-Asprima, stressed: «The housing policy of the government and regional authorities cannot be aimed only at expanding public access to housing exclusively through rent». He also pointed out that regions such as Murcia and Andalusia have already taken the first steps of emancipation of the young able-bodied population. First of all, we are talking about favorable conditions when issuing mortgage loans.
The potential of the autonomous community of Madrid is also noted. At the moment, there is great hope that full-fledged programs of state guarantees and assistance to persons under 35 years of age in purchasing housing will begin to operate by the beginning of the next regional elections in the community. The elections are due to take place in May 2023.
Sources close to the Madrid government confirm that a new model of such guarantees is currently being finalized, which will be based on a formula for providing a mortgage loan according to formulas already used in other European countries. The state will have to guarantee against a loan issued by financial institutions to a future buyer of residential real estate.
The state is ready to take risks, since the main problem of young people with the purchase of housing is not even the lack of sufficient savings as such, for example, due to a small salary, but an insufficient number of such savings for the first mortgage payment of 20%, as well as additional costs that the loan does not cover. All this is due to the fact that banks usually issue loans at a maximum of 80% of the total cost of the purchased housing. Thus, only a small amount of assistance is required from the state to cover contributions and additional expenses, and this will allow a sufficiently large number of people to decide to buy a new house.
This is not the first attempt by the Madrid government to put such a program into effect. Earlier, an attempt was made to introduce the British model of assistance in buying a home, but it was discarded quite quickly, since insurance companies and the sector could not agree on the conditions under which such a model could work to the benefit of all parties. It took almost a year to rethink the possible model of customer assistance and, finally, it is ready for implementation. The very same program, called the «First House», began to be talked about back in 2020, when the current chairman of the Government of AC Madrid, Isabel Diaz Ayuso, announced it.
It is promised that assistance will be provided in relation to the purchase of apartments with two or three bedrooms in the suburbs of large cities and peripheral areas of urban agglomerations. Their area should, on average, be in the range of 80 to 90 square meters, and the market value in the range of EUR 150,000-400,000. There are discussions on the introduction of restrictions on mortgage loans in the amount of EUR 200,000.