Spain: New Government, New Real Estate Market

Spain just had elections. The country usually has one election every four years, but lately there have been four of them in the last four years: 2015, 2016, April 2019, and November 2019.

Nowadays, Spaniards are tired of voting and seeing how their politicians are unable to negotiate and make agreements. Politicians also know it, and it seem this time a coalition will be possible: The party that has won the election, the central-left PSOE, has announced an agreement with PODEMOS, a party in the most extreme left. 

They will still need more agreements with other parties to create a strong coalition, but for now we can get some considerations from this first agreement. For real estate investors in Spain, we have some news. Sadly, it is not good news.

In the recently signed agreement between the parties, it is said that housing “is a right, not a commodity”. This statement has many readings. Actually, it is copied from Raquel Rolnik’s, special relator of the United Nations (UN), statement years ago, and it has been repeated regularly by different voices on the UN itself. And for sure, the UN cannot be defined as an anti-establishment organization.

However, PODEMOS is another thing, and the interpretation of the sentence may be much more active than it has been until now. 

In principle, the statements seem to suggest that the government could try to limit the increase of the prices for both renting and selling housing, aiming to make it easier for low- and average-income families. 

On the other hand, this would be really bad news for investors. If we look at the results that Ada Coalu, Barcelona’s mayor from a party very similar to PODEMOS, has had in her government, the third quarter of this year has been the first time since 2013 that housing prices have gone down. There is an important nuance though. Barcelona is not only hit with the regulations from the city council, but also from all the violence resulting from their independency fight.

In Spain’s case, we do not expect a coalition between PSOE and PODEMOS as leftie as Barcelona’s government mainly because the PSOE is far from that, but it will depend on the ministries that PODEMOS get in the prospective new government coalition.

For now, Spain’s market is difficult to forecast. The economic stability seems under pressure, and the new government approach can be very different than the one it had in the last years.

If you are thinking about investing there, just be cautious.