Ministry of Housing budget cuts threaten property sector recovery say developers

Developers are up in arms over plans to reduce subsidies for building social housing.

The right to decent housing may be enshrined in the Spanish constitution, but not even the Ministry of Housing can escape the substantial budget cuts announced by government to get the deficit under control. As of next year “some incentives to build and buy” social housing will be eliminated, the Ministry of Housing says, with cuts phased in over 2 years. To help “reorient the budget” of the housing plan, resources will focus instead on incentives to rent and refurbish public housing.

Developers are furious. Housing starts have collapsed to historic lows, and many developers were banking on contracts to building public housing just to stay afloat. They are doing their best to try and scare the government off.

According to Pedro Pérez, head of the G-14 group of Spain’s biggest developers, real estate activity and residential construction are of “capital importance” to Spain’s economic recovery and job creation. “It is one of the businesses that has the biggest impact on jobs, both directly and indirectly,” Pérez told the Spanish press. So any threat to the real estate sector should be interpreted as a threat to the Spanish economy.

Pérez warned that “taking away one of the few remaining incentives to buy property will have a negative impact on the economy in the short term,” and will “run the risk of snuffing out the incipient and weak recovery the sector has seen since the end of last year.”

“All told, in Spain we’ve been through various years in which, not only have there been no measures to soften the crash in the sector, but also they are taking away the few remaining stimulus,” grumbled Pérez.



One thought on “Ministry of Housing budget cuts threaten property sector recovery say developers”

  1. Charles Mackenzie-Hill

    I think we all sympathize with the developers, and it must be demoralizing as a developer to have theses cuts. Surly though we already have to many empty properties. Even a front line established development like Dominion Beach in Estepona are put at risk. Their must be mutual concern for communities resale to generate new money within a development. Drive to Gibraltar to see, the thousands of unsold properties, which must make you wonder, as to the sense , for further new developments. Jobs , verses ,empty properties I Guess? One solution is needed and that’s more protection for the landlords, guaranteed money, lets say from the government. These unsold empty properties could then be used as public housing. This brings life to the community, attracts buyers, which then provides the need for further development. Sounds easy?

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About Mark Stücklin

Mark Stücklin is a Barcelona-based property market analyst and consultant, and author of the 'Spanish Property Doctor' column in the Sunday Times (2005 - 2008). He can be reached by email on