New dawn for spain…or more of the same?

What impact will the re-election of José Zapatero have on Spain’s property market?

Zapatero's Socialists won 169 seats in the lower house of Parliament, compared to 153 for the conservative opposition Popular Party headed by Mariano Rajoy.

The victory, although an improvement of five seats for the Socialists from the 2004 election, left the party seven seats short of a majority in the 350-seat parliament and in need of some form of an alliance with smaller parties in order to govern.

But will the re-election have any significant impact on Spain’s property market?

Market to remain ‘restrictive’?

Carlos Ferrer-Bonsoms, Land & Residential National director at Jones Lang Lasalle, believes that the results of the election ‘won’t have great importance in the real estate market’s behavior’.  He added: “These days our real estate market is suffering the consequences of an international finance crisis, which is causing trouble for sector companies, as well as private individuals interested in acquiring a house.

“We have to take into account that all the real estate market is intimately linked to the financial market. This financial market changed drastically last summer of 2007, and because of that, as long as it won’t become more flexible, the real estate market in general will remain in a restrictive situation.”

Bad news for Off-Plan buyers?

Martin Dell, of Kyero.com, commented: “I think the government will eventually acquire unsold newly-built housing at the developer fire sales and use them for subsidized housing, which for most people, is good news. For those entitled to subsidized housing, there should be more of it available, at lower prices. For property owners who aren’t in any hurry to buy or sell it’s business as normal.

“The worst hit in the short term will be buyers of off-plan property who, for whatever reason, are on a fixed timeline to sell. More than likely, the developer will undercut private asking prices with their own unsold units—and that’s assuming there are buyers available. New build starts have ground to a halt but more properties are coming on to the market every day as developers rush to complete so they can service their bank debt.”

Oversupply problems

Charles Svoboda, vice president, Abusos-Urbanísticos No, a citizen’s property rights group, argues that property markets would ‘remain shaky for some time to come’: “Promoters and developers have for too long called the shots and a massive oversupply of housing has been one unfortunate result. Dependence on construction as the “motor” of the economy has been another.

“The government has promised to encourage these excess dwellings and new “social” housing to become available, and if it can deliver, this should push market prices lower.

Unfortunately, I don’t see that the reelected government in Madrid will have the confidence to introduce the needed measures to restore the all-time low consumer confidence level, or the economy, let alone the property market soon.”