The PwC Economic and Business Consensus considers supply shortages and inadequate legislation, with a Housing Law that has not had "the expected result", to be among the main causes of Spain's housing problem and has therefore called for combating bureaucracy, speeding up planning permissions, and increasing the volume of buildable land.
The problems behind Spain's high housing costs and lack of supply
This is the conclusion of the Economic and Business Consensus, corresponding to the second quarter of 2024, which has been produced by PwC since 1999, based on the opinion of a panel of 450 experts, businesspeople and executives. On this occasion, the report analyses the problem of access to housing in Spain.
The group of experts, managers and businesspeople all agree that the main problem behind Spain's high housing costs is the lack of supply (77%), followed by inadequate legislation (48%) and property speculation (23%).
Given this situation, most of those surveyed were in favour of speeding up planning permission (70%), increasing the amount of land available for building (61%) and promoting property renovation (56%). As a result, they consider that the Housing Law has not had the expected result and that the available land continues to be excessively protected.
As for the specific initiatives that the legislator should take to address the housing shortage, 72% of experts favour encouraging public-private partnerships to promote rental housing, 64% favour boosting the social rental offer and 62% support a new Land Law to improve administrative process management.
"The housing shortage is such a serious problem and its construction is such a slow process, taking more than two years, that collaboration between public administrations and private developers seems to be the most efficient solution," the report claims.
Meanwhile, 55% of experts and managers are in favour of liberalising the property market further, which would involve removing rent caps, putting more land on the market and, to a lesser extent, increasing building capacity.
Those who believe that an interventionist policy is better (35%) mostly call for the State to centralise all land regulations, given that this is a national problem, and, among them, only 13% think that the legislation should remain as it is now.
As for the impact of foreign investment on the real estate market, 51% of those surveyed indicated that it "increases the price of housing". When asked about the causes for the lack of rental housing, 93% pointed to the use of housing for tourism, although they limited the problem to the centres of tourist capitals.
Consumption, exports and employment consolidate growth
For the second quarter of 2024, the Economic and Business Consensus shows that the Spanish economy seems to be on a positive growth path, which will continue until 2025.
Ninety per cent of experts, businesspeople and managers rate the current economic situation as between good (63%) and fair (28%). Last March, 46% thought the current situation was good. Now 4.5% say that the situation is excellent; the same percentage of those who say it is bad.
Eighty per cent expect activity to remain the same in the next quarter and 15% expect it to improve. By 2024, 50% of the panellists expect GDP to be between 2% and 2.5%. Optimism is maintained when asked about 2025, as 51% are confident that the increase in activity will remain in this range and 37% expect it to be between 1.5% and 2%.
Meanwhile, 53% of the respondents consider that households' situation, in terms of savings, indebtedness and income, is fair and 38% rate it as good, ten points more than in the last quarter and 20 points more than the previous one.
Some 72% expect consumption to remain stable over the next six months and 21% expect it to increase, 17 points more than at the end of last year.
Interest rate and inflation outlook
Interest rates are a determining economic factor because they make borrowing and corporate debt more expensive. The ECB has put them at 4.5% after the first cut; 61% of respondents expect them to be between 4% and 4.5% all this year (which could indicate some decline) and by June 2025, most believe they will be in the 3.5% to 4% range.
When asked about the position in 18 months, half of them mark the 3.5% to 4% range and the others "below 3.5%". The rate hike is intended to reduce inflation, but in this respect, there seems to be little hope.
In previous surveys, the majority expected inflation to be between 2.5% and 3% next December, but today the number of those polled has doubled to between 3% and 3.5%. Even 16% believe that it could rise above 3.5%. In a year, 45% believe it will be between 2.5% and 3%.