Expert opinion on some of big questions facing the Spanish housing market

Juan Velayos

I always listen to Juan Velayos when he talks about the Spanish housing sector, as he strikes me as being notably well informed. Velayos was the boss of Neinor homes – the biggest of the new generation of Spanish developers – and I’ve heard him speak a few times at conferences with informed fluency. Now at asset manager Alantra he was recently interviewed by the Spanish property portal Idealista on some of the big questions facing the market. Here is an abridged translation of his answers.

Where is the market today?
In a mature phase of growth characterised by stability after years of growth.

Is the sector worried about the new left-wing government?
What the sector dislikes most is uncertainty, and politics can contribute to the uncertainty. The last year and a half of political uncertainty has not helped anyone, but at least we now know what government we have. Now the focus will shift to policy, and so far it looks like they will penalise the housing sector, the economy, and the job market. But let’s give them the benefit of doubt, and see what happens. It’s good to finally have a government, and let’s hope they get things right.

What will house prices do in 2020?
Velayos doesn’t expect them to rise more than 5%, and that’s a good thing he says. Ever-rising house prices create tension, problems with affordability, and greater indebtedness. This year he forecasts a stable market without big increases, but also without big falls whilst interest rates stay so low.

Is there a problem with building land in Spain?
The question of building land and planning is ridiculous. There is no justification for the 12 to 18 months it takes to get planning permission when everything is in order. Nobody takes this problem seriously, probably because the sector has never been credible with the administration.

What about rent controls?
It’s a catastrophic mistake, and a demonstrable failure wherever it has been tried. You just get a smaller supply of housing. Some say what you need is more housing. and others say rent controls, but it’s just a fatuous exchange.

Beyond Madrid and Barcelona, where are the good real estate investments today?
Velayos is a big fan of Malaga city, and sees it as an example of how things should be done. Also given the thumbs up are Bilbao and Valencia city, although the latter is complicated from a political and urban planning point of view. In the eternal rivalry between Madrid and Barcelona, the Spanish capital is doing better as the Catalan capital goes through a period of uncertainty.

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