After the heavy rain in the crisis period, we carry on with at least four years of evident signals of recovery in the real estate industry. Through numbers as revelatory as more than 500,000 houses sold in the past year.
For this 2019 it is expected that those numbers are consolidated, inside of what is supposed to be the summit of the expansive economic cycle in which we are immersed. Passing through a phase of moderated growth, such as we introduced in another article a few weeks ago, titled “Why now is the best moment for selling”. Basing from as it was explained in that article, what really affects the industry progress are the availability incomes of families.
In that sense, until the end of this year or even the beginning of 2020, it seems that we could be facing a very similar scenario as the last one-and-a-half year. Thus, there are certain events that undoubtedly could affect this path, so we will have to follow up.
In the following, we are going to review some of them:
It is expected that by the end of March or the beginning of April, the new Mortgage Act will be approved. Especially the distribution of constitution expenses of the mortgages deserve attention. In fact, after the controversial sentence of the “Tribunal Supremo” about the “Impuesto de Actos Juridicos Documentados” in October, all the mortgages were “stopped in their tracks”.
ECB RAISING INTEREST RATES
As we said in the prelude of the article, one of the most determinant factors of the industry progress are the access to credit. The expansive policies that are carried by the ECB (European Central Bank), made that we are in a scenario of negative interest rates. According to the same entity, they are planning to keep this policy until next summer. From that date on, we will see how it will affect the mortgage market with a hypothetical raise of interest rates.
RENTAL PRICE LIMITATIONS
Some politic parties are demanding that a limit should be set on rental prices, especially in big cities. These price limitations -as every economic interventionism over an open market, under any of its forms-, it could create imbalances between offer and demand, making that many people that have invested on housing with that purpose, would look for a way out to their investments. Especially sensitive to this issue are the foreign investors.
“NEW” HOUSING PLAN
General State Budget recently presented, that it has been included an expenditure item of more than 600 billion euros for public housing. Although, most of them intended both rental fostering and urban and rural regeneration. Meaning, we cannot know if these funds will go to new constructions, recovery of the existing houses, subsidies for encouraging the access to the same… and nevertheless, we will not make conclusions until the plan is approved.
THIS YEAR WE HAVE ELECTIONS
In 2019 we are having elections, both municipal and autonomic. It is well known, the competences in urban matters are for Autonomous Communities. So, without entering politics, each party has its own criterium about territorial planning models; and because of that, much of the plans that are still being developed, could be modified depending on the politic party for the upcoming government.
Overall, what it is expected for this year are moderations of property prices and consolidating the number of transactions registered in the last two years; continuing the path of 500,000 conveyances a year -according to the last data published by INE (National Institute of Statistics)-. In a nutshell, all the factors mentioned above invite us to be prudent inside the frame of optimism that we are currently breathing; because the real estate industry is very sensitive to any ups and downs that happens in the market.