The future of the real estate sector

Category: General

After the pandemic period, the real estate sector is experiencing a situation that has led real estate agents to consider it as a housing emergency. Natalia Nieto, CEO of La Home Inmobiliaria, did not hesitate to make some interesting statements in a round table organized by the newspaper La Razón Comunitat Valenciana about the behavior that has been manifested in the last three years with respect to housing residential.

The origin of the housing emergency

As Nieto relates, during the pandemic there was a change in the perception of home. In fact, during confinement many have detected problems in their properties, with space being the main reason why many have chosen to move. Therefore, it is not surprising that the demand for spacious homes located in residential areas, with open spaces, terraces and, in addition, with space to install renewable energies.

Such increase in demand for residential homes triggered a massive purchase of properties in residential neighborhoods throughout Spain during the years 2021 and 2022. However, the excess demand has caused the worrying situation that experts are talking about. Natalia points out three factors that make it easy to understand the severity of the situation: The lack of housing of this type to meet the needs of consumers, the high prices of plots - which prevent the construction of new homes - and the increase in housing prices due to the limited availability of real estate.

This problem not only affects those who choose to purchase housing, but also those who want to access a property for rent. Given the situation that we are discussing during this article, second-hand home owners tend to value their properties above their real value. In fact, the lack of land to build new housing means that second-hand properties sometimes have a higher price than a new construction property would have even though they often need to be renovated to be updated and habitable.

Likewise, there is also the interest of a foreign public in living in the residential neighborhoods, in this case, of the city of Valencia. In fact, up to 40% of the homes sold or rented are intended for foreigners looking for a vacation spot in the recently named best city to live in.

Middle class young people, the most affected

During this round table, the agents of the real estate sector were clear: It is the middle class people who are mainly affected by the exorbitant prices that homes are reaching. Furthermore, they claim that the increase in prices will maintain the upward trend and will not stabilize, at least in the short term.

The youngest are also considered the most affected, adding to the difficulties they already had in becoming independent and accessing housing.

Based on the fact that middle class young people cannot access the most expensive homes and that, currently, there are no properties with cheaper prices, experts propose promoting new low cost projects based on sharing spaces: coliving.

As we have mentioned before, coliving is a new residential housing model that is based on sharing common areas with other people and, at the same time, having your own space. A housing model similar to university residences and shared apartments. However, due to its characteristics, this residential model is more frequently found in rental and is usually the ideal option for young students who are completing their studies outside of their hometown or, directly, young people who seek to become independent, but who do not have sufficient financial resources.

The truth is that the entire Valencian Community is facing an exceptional circumstance for which experts are asking the administration for immediate solutions. This solution involves regulating the prices of the plots to build new homes. The situation in the real estate market is worrying because, in just four years, the supply of housing has been reduced by more than half.