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Imbalance between the supply and demand of homes. | Josep Bagur Gomila

Andrew EdePalma14/06/2023 08:50
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The Bank of Spain has issued a report into the imbalance between housing supply and demand and its relationship with prices. This indicates that housing prices will continue to show resistance to falling because of factors such as the shortage of new construction.

A key recommendation is to review policies regarding developable land in order to stimulate the building of homes so that this can respond more quickly to existing needs. One of the regions with the greatest resistance is the Balearics, where there are great difficulties in terms of supply being adjusted to demand. The situation, in the Bank's view, will worsen because of population growth.

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As things are, the building of new homes on the islands will be insufficient, which is why the Bank strongly urges a review of developable land policies in order to expand the possibilities of building.

The Bank is essentially echoing views of the Balearic property sector. Representatives such as the president of the Proinba developers association, Luis Martín, have been "tearing their hair out" in attempting to increase the amount of developable land.

The sector is hopeful that the change in government in the Balearics will enable an increase. However, the Partido Popular's manifesto didn't contemplate the type of revision that the sector and the Bank of Spain are urging. The PP's line is to make the most of existing construction through incentives and facilities for placing it on the market and without the need to consume more territory through a reclassification of land. The PP advocate incentives for owners, rental aid, reformulating density indices, simplifying administrative procedures and converting large premises and old houses.