The new minister responsible for housing could do worse than transmit some optimism to the market.
Is a property crash a good time to buy property in Spain? Ana Pastor clearly thinks so. The new Minister of Public Works (Fomento), whose remit includes housing, recently bought a flat in Pontevedra (Galicia) for more than 200,000 Euros, and now owns three homes in Pontevedra and Madrid.
If only more people shared her optimism there might not be such a big glut of homes on the market. Optimism is a crucial quality of any market, and gives people the confidence to buy.
But for optimism to return she will have to introduce reforms that the last government failed to. If she gets it right, she could make a big difference to the Spanish economy and people’s lives.
There’s no denying the scale of the problem she faces. The market is moribund after 4 years in crisis with no end in sight. The credit crunch is back and hundreds of thousands of homes have been repossessed, swelling the glut of homes already on the market. Millions of properties stand empty whilst countless young adults can’t afford a home of their own. The Spanish Constitution guarantees the right to dignified housing, but the Spanish housing market is one of the most dysfunctional on earth because of laws that the Government can change, if it wants.
What should she do? Start tackling weak property rights, slow justice, town planning corruption, a lack of transparency, high transactions costs, and a whole lot more – issues that can only be solved through serious reform, not futile gestures like the last government’s “road-show” . Let’s hope she has the stomach for it.
For what it is worth, here is my list of things the new Government needs to do to regain the confidence of foreign buyers, which would go a long way towards solving the problem.
– Pressurise regional governments to reform so-called “Land Grab” laws
– Enforce laws in a timely-fashion
– Fix the courts as justice delayed is justice denied
– Improve market transparency
– Reduce transaction costs (some progress)
– Tackle systemic corruption (some progress)
– Punish corrupt officials (some progress)
– Regulate estate agents
– Make lawyers more accountable to their clients
– Re-think the urban-planning model
– Reform the absurd Ley de Costas / Coastal Law
– Enforce bank-guarantees
– Resist peddling conspiracy theories
– Compensate Len and Helen Prior