Why in 11 provinces of Spain the price of officially protected housing is more expensive than free market housing

2023-11-04 09:21:47

The impossible becomes possible in the residential market. According to data from the Spanish Mortgage Association (AHE), taking into account appraisal values ​​from the Ministry of Transport, Mobility and Urban Agenda (Mitma), There are eleven provinces in Spain where the price of protected housing is more expensive than that of the free market. This means that it is cheaper to buy a house without restrictions for sale or rent than one that does.

There are several types of social housing, from the classic official social housing (VPO), to limited price public housing (VPPl) or basic VPPB, which change in their maximum sizes, or even social housing. public for rental (VPPA), the latter must be used for rent. The qualification of this type of property is given by the type of land on which they are built, which has been established in the planning of a city, and They will be sold or rented at the maximum price set by the autonomous community.

A priori, Luis Corral, CEO of Foro Consultores, points out: “It makes no sense to pay more for a protected house than for a free one.” This phenomenon occurs in the provinces of Teruel, Real city, Cuenca, Lleida, León, Lugo, Toledo, Córdoba, Albacete, Ourense y Castellon. In these regions, the differences between the two types of houses vary from only nine euros per square meter, in the case of Castellón, to more than 335, in Teruel. Most of these towns are part of the interior of the peninsula and are outside the focus of interest of real estate investors.

How is it possible for this phenomenon to develop?

The director of Foro Consultores points to several situations that could lead to the price of free housing being lower than that of protected housing. The first would be a “temporary imbalance or that the free housing supplyin principle used, be a park deteriorated or poorly locatedIn general, this point includes populations that continue to lose inhabitants, causing prices to be low and making it difficult for them to evolve above the protected level.

Also can occur in a bearish cycle real-estate market. This happened during the years after puncture of the housing bubble 2008: the prices of the modules, the maximum price at which subsidized housing can be sold, were set by the communities in a rigid and artificial way, while an oversupply and low demand in the market caused price falls in the free market. This ends up generating this inconsistency in the residential market where some prices are lower than others, when it should be the other way around.

On the other hand, there is also the situation that building a protected home from scratch has a cost, especially after the inflation registered in recent months. Without taking into account the value of the land, a couple of years ago, it could be built for less than 1,500 euros per square meter, something unviable today. This causes that, Even if it is for protection, the home has a minimum pricewithout which no promoter would launch itself to promote it.

If the maximum sales price, known as the module price, is below the costs of construction, land and taxes, in addition to the margin, no investor is going to build a single subsidized home. This is what happens, to a large extent, in the Community of Madrid, where the module has not been updated since 2008 and prevents, with current construction costs, the construction of this type of affordable houses. Luis Corral proposes a formula to correct this imbalance in the market: “In many areas, the modules of officially protected housing (VPO) have not been updated for years. This means that while free housing is governed by supply and demand, the protected person does not move and causes these imbalances, which the competent administrations can be solved by adjusting the module to the reality of each market“To begin with, it makes no sense for anyone to buy a more expensive subsidized home with the restrictions it has when it comes to selling, unless the free one does not meet the conditions,” concludes the manager.