How Will The Political Panorama Affect The Property Market

27 Nov 2023 | Blog

After the Government formation and a little over a month to end 2023, Tecnotramit considers and values the property market’s current situation as one of the main companies in Spain and Portugal to service many of the most important financial entities and property agencies.

After a new Property Minister appointment and Sánchez’s announcements regarding property for his new term in office and the Housing Law coming into force some 6 months ago, the company warns the first decisions the new Government makes as for property policies will ‘set the pace, tone, and evolution of the Spanish property market for the upcoming decade since steps taken in the property market have an immediate effect on offer and supply as well as direct and indirect consequences over mid- and long-terms on the country’s housing stock and citizens’ consumer habits.

In today’s economic context, Tecnotramit forecasts monetary policies driven by the European Central Bank (ECB) will also be decisive on the market’s progress. According to Tecnotramit’s forecasts, EURIBOR will stay at 4% during 2024 and won’t be until 2025 when it starts on a downward trend due to overall deflation in a good deal of the world’s main economies.

The Next Generation benefits are masking a precarious budgetary situation. If only 0.6% of Spain’s GDP were allocated to public housing, the budget would be of 8 billion per year instead of the current 1 billion. This year’s budget for public housing policies is half of what it was 20 years ago, no matter how much President Sánchez says that housing is the fifth fundamental pillar of our society. With these figures, it is impossible to increase the supply of affordable rental housing,’ as assured by Vicenç Hernández Reche, economist and Tecnotramit’s CEO.

With regards to modifications in eviction processes, Tecnotramit insists the key to increasing rental housing supply lies in the approval of more measures that encourage a monthly payment reduction of 5% thanks to tax incentives on owners. ‘It is the best proposal included in the new Housing Law. Even though we do not have proof of mass implementation, this measure moves in the right direction.

Furthermore, Hernández Reche insists the property market access issue must be dealt with ‘in a transversal manner and with new housing policies adapted to the market’s real situation.’‘A lack in supply increases the number of sub-housing and environmental degradation. We face a serious social problem of access to the property market in Spain’s main metropolitan areas, while results from initiatives such as the “Plan Madrid Vive” (Madrid Lives Plan) and “Habitatge Metròpolis Barcelona, HMB” (Barcelona Metropolis Housing) have been very uneven,’ as warned by the economist.