The European Central Bank (ECB) has already raised the key lending rate twice in 2022, ending more than a decade of extremely cheap money that the general consumer could get negative rates. At the same time, the increase in the cost of lending this year was the highest in the last 22 years. While uncertainty in Europe is growing, the US is already sending signals of its intention to raise lending rates further.
ECB President Christine Lagarde has admitted that there are no restrictions on raising rates now in the face of inflationary escalation. Although there are enough economic reasons for inflation, one of the main drivers is the Ukrainian crisis, the energy crisis, the semiconductor crisis, the food crisis. The European Union is in unprecedented shock and any tool to combat it will be used as necessary.
Indeed, the assessment from Brussels is also true at the local level, by country, region and industry. If you pay attention to the real estate market, you can easily notice the high concern of real estate experts about the rising cost of mortgage loans, rising prices for building materials and energy, which affects new construction, and the shortage of new construction itself.
It is indicated that despite the inevitability of a decline in demand for real estate in the future (approx. due to the unprofitability or impossibility of such an acquisition for the general consumer), specifically today the market is suffering from extremely high prices due to a shortage of housing for sale.
The situation in Jerez, Cadiz
The Meeting on Urban Development at the City Council of Jerez, a municipality in the province of Cadiz, allowed the construction of 54 new houses in the last month alone. In total, 488 permits for the construction of new housing were issued from January to September 2022, which is more than for the whole of 2021. 162 houses will be located in the historical center.
Such actions are part of the strategy of the municipal authorities to combat the shortage of housing on the market. At the same time, despite the fact that this year permits are issued for private construction, in 2023 the authorities plan to expand construction programs to the segment of social housing.
But returning to private development, it is worth noting separately one of the latest projects — a residential complex on Calle José Ignacio Pineda. This project involves the creation of two four-storey residential buildings on a plot of 5,533 square meters., which will provide the market with 84 new apartments, a similar number of garage spaces and 72 storerooms. In total, the area of the complex will occupy 8,492 square meters. Additionally, green areas, pedestrian paths, children's playgrounds, a swimming pool will be created.
According to experts, Jerez is still one of the cheapest cities not only in Cadiz, but also in Andalusia in general. Both the real estate objects themselves and the land for their development are cheap. The city can afford the active construction of new housing and has a good market potential, but today it is constrained by the existing deficit. However, it is added that with a little help from the municipal authorities, the situation will be able to resolve itself.
In any case, while new housing is only planned for construction, existing buyers satisfy their demand by buying real estate on the secondary market. It is significantly cheaper than the primary market and has sufficient space for price growth.