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Political uncertainty threatens to accentuate the slowdown in the housing market

Date: September 22, 2023 Time: 21:38:46

The current political blockade once again puts the housing market in check. After the general elections on July 23, the situation of uncertainty has increased and Spain is going through a moment of slowdown in which there is no clarity for the formation of a Government in the short term. This condition, added to the continuous rise in interest rates by the ECB and the Fed, in addition to the legal uncertainty caused by the new Housing Law, has led the sector to plunge into a new crisis in which lower demand is combined in a scenario of already overheated prices.

This new national scenario at the political level once again destabilizes the market. “We are waiting and a bit uneasy, but this situation can generate insecurity,” the president of FADEI, Montserrat Junyent, told La Información. In addition, the leader of the real estate employers alludes to the fact that the political situation presents very different positions and that the Housing Law approved by the Government has completely reached the end of the future administration.

“A matter as sensitive as housing, however, needs a consensus from all political forces. There will always be someone who is not happy, but this whole situation generates insecurity”, says Junyent. The specialist settles that the political blockade makes “the legal uncertainty that is being experienced even more evident” and that, for now, the uncertainty of the result keeps them in a balance in which they do not know what will happen. In addition, industry experts believe that a change in the government could bring new measures, such as the repeal of the new Housing Law or other plans, and they think that movements like these will once again delay the positive effects on the market.

“Uncertainty is the worst option for the market,” the announcer and director of studies at Fotocasa, María Matos, told this newspaper. For her, the real estate sector requires financial stability to be able to develop and also a political climate that invites legal security, which generates confidence in the market. “If these conditions do not occur, or are not clear, it is likely that the investment will move away in search of areas of less risk,” she concludes.

The different parties in their electoral programs have proposed measures regarding housing that range from repealing the regulations launched by the Executive, modifying it, promoting subsidized housing, to promoting land use, among others. For Matos, the change of political color in the Government could bring changes in the law, measures to reinforce anti-occupation or the promotion of a law of legal security in matters of urbanism, “which would be positively received within the sector.” If, on the contrary, the current government continues in power, “the housing law would remain in force and packages of measures would be added that would improve access to rent, according to what the campaign raises,” he says.

Despite this, remember that most of the measures contained in the law depend on the application of the autonomous communities. Along the same lines, one of the ideas put forward by Sumar, the party led by Yolanda Díaz, was that the market in stressed areas should not depend on the political will of the regional government, so it seeks for the State to define it. . In this regard, the president of the employers’ association indicates that it would be an invasion of powers, and that the law provides for the need to collect data to be based on the realities of each CCAA and municipalities, because “they are the ones who know the needs of their territory, no one further”.

But this instability comes from before. Spain has been characterized as one of the most attractive real estate markets globally. Different investors, both national and international, have started doing business in the country. However, for some years the lack of land, squatting, labor shortages, and other aspects have caused legal uncertainty that questions the possibility of investment. Experts indicate that this situation, in addition to affecting housing, also directly affects investment at a general level: “This slows down investment because it creates uncertainty,” says the Director of Taxation at Ayming Spain, Sonia Álvarez.

“The expansion of a government formation or one in office delays the effects on the market”

The specialist comments that foreign investors are unaware of the consequences and impact of the political and economic measures that will be implemented in the country, and therefore, “paralyze or slow down their investment decisions,” adds Álvarez. For this same reason, the Director of Fiscal de Ayming España believes that this period of instability caused by the absence of government could delay the execution of European funds, or reforms of the Recovery Plan, leaving investments on ‘stand by’ as well. of foreign capital funds or falls on the stock market.

“There are scenarios for everyone in the sector, but there are those who need to sell and there are many circumstances that are being lost. You no longer know what to advise, because between the types and other factors, everything becomes very difficult”, adds Yunyent. Although it also specifies that sales, for the moment, have not been so affected, because those with the greatest movement are the bands with the greatest economic capacity, but even so “the scenario to recommend is not ideal.” “No matter what happens, the expansion of a government formation or one in office, paralyzes the momentum of the measures announced in the campaign and delays the effects in the industry, which generates reluctance when interacting with the market,” he concludes. math.

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.

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