Actual occupiers are what’s needed to remove the surplus. They can be owners, holiday homes or tenants, as long as its a new household that’s being created. That happens naturally with an expanding population and increasing wealth, neither of which Spain currently has. Only with a new household can it be taken that a property has been removed from the market. Investor buyers without tenants are just shuffling the ownership, but not removing the problem. Properties in the best locations have been and always will sell to occupiers. It’s the ‘dross’ that’s the problem and that will only sell if there is absolutely no alternative in a better location and/or specification, coupled with demand that has no alternative to being in that location. Building new houses, unless they are of poorer spec or location, will only take away potential buyers from the poorest properties that we have now.
The prices of property have to fall faster than the wealth and numbers of the population are decreasing, for there to be an increase in individuals able to afford property thus removing that property from the surplus. Encouraging foreign buyers with the ‘Residencia’ scheme, will only help to remove the surplus if they actually occupy the property. If they just buy, but then offer to sell or lease it, then the property is still part of the surplus. However, the ownership problem is removed from Spain and therefore able to be discounted from the Spanish debt and so helping the national economic statistics.
Campbell D. Ferguson, FRICS, is a chartered surveyor in Spain. His company Survey Spain Network arranges valuations and surveys by RICS chartered surveyors anywhere in mainland Spain and the Balearic and Canary Islands, and Gibraltar. This includes valuations, building surveys, structural surveys, building inspections and investment and development appraisals.