Minister of housing confirms there will be no public bailout for Spanish developers

Beatriz Corredor, Spain’s new minister of housing, confirmed yesterday that there will be no public bailout for developers.

“Solutions for the construction sector should not divert limited public money away from providing decent affordable housing to the less well off,” Corredor told the Spanish press.

This is change of tack for Corredor, who just a few weeks ago favoured various measures, such as tax breaks, to stimulate demand and support developers suffering in Spain’s property market crunch.

Corredor changed her tune after Pedro Solbes, vice-president and minister of finance, firmly ruled out interfering with public money to help stricken Spanish developers.

Appearing last week before the congress of deputies, the lower house of Spain’s parliament, Corredor obediently towed the line laid down by Solbes. She ruled out all bailouts, including tax breaks on second homes, and subsidies for struggling developers. “The government’s position is not to prevent, in an artificial way, a slowdown in the sector,” said Corredor.

The government’s position is that a downturn was inevitable after a decade-long property boom that distorted the economy. The government appears to be in favour of a shakeout in the sector that reduces Spain’ dependence upon construction for economic growth. Who survives will be left to natural selection and the survival of the fittest. “The most competitive, innovative, and productive firms will emerge stronger,” explained Corredor.

Corredor also pointed out that building more housing than is needed, as Spain has been doing in recent years, is a waste of land and other limited public resources.

Corredor is urging all levels of the administration –national government, regional government, and town halls – to work together on a ‘road map’ for a national solution to Spain’s property market crisis.

Developers continue bleating for a bailout, warning that the worst is yet to come for their sector, and pointing out how important they are to the economy.

Guillermo Chicote, president of Spain’s association of developers and constructors, claims that developers only have the interests of others at heart. “It’s not for us,” he told the Spanish press. “It’s to help the buyers.” In effect, developers are asking the government to use public money to help buyers to take on more debt so that they can afford the over-inflated prices being asked by developers.