Last week, Secretary of Housing Beatriz Corredor, referred to developers as the cause of the crisis and as the only ones responsible for solving the problems arising in the sector property. For its part, the PACE President Jose Manuel Galindo has thrown balls out accusing the banks and savings banks in excess of lightness and little foresight in granting credits. It seems nobody wants to assume its share of liability (if any), and is looking for a scapegoat who could blame everything that happened. Is there then a single charge in our housing crisis?
only in the real estate sector growth situations occur if the circumstances are real capable of generating the same , speculation, bubbles and other market distortions are not sufficient cause to fuel growth U.S. housing sector that is, although they may play an important role in its development. If there is a real demand situation in the market is not sector growth, and it is clear that in recent years our demand for housing and other real estate was solid. This should be clear, as the housing market is not based on financial speculation, but in tangible assets as buildings, offices, etc., which have intrinsic value and are rarely below the general price index. The vast majority, unless specific circumstances based on bad locations, status, etc.., Real estate assets are safe.
But unfortunately, in situations of growth of the sector can produce distortions that ultimately lead to overpricing of real estate bubbles, and finally economic crisis. If we focus on the causes that have generated growth Our real estate sector in the last ten years we have:
- A emancipation synchronous generation of "baby boomers" in the transition period of the twentieth century to the XXI century, so that a real demand for first home comes to the fore.
- A obsolescence our housing stock, which are still much under-housing and low-grade self. So that a replacement is urgently needed them.
- An immigration fed back by the same upward trend in the economy and sustained, than in offering low wages, the aging of the English population and the consequent lack of manpower.
- A demand of European citizens who choose to take up residence or retirement retreat in certain parts of our country.
- An application for European citizens who choose to set your holiday destination in certain parts of our country, which implies the need to build hotels, resorts, apartment-hotels, summer homes, etc. Our offer and activity Real estate is always greater than the European average under that generates double demand: the English domestic market and foreign market Europe.
- A construction relatively low prices .
- free housing crisis because after a phase of steady development of housing.
These factors were behind the last growth cycle of our housing sector, are real factors, not speculative, and its depletion would not necessarily cause a crisis like we have now but, obviously, would result in a slowdown sector. What factors have occurred then the unsustainable growth in real estate prices and triggering a major crisis? Who are its leaders?
We highlight two main culprits, and Banking government, which in no way means that there were no speculators and investors eager for quick profits that took advantage of time. But in our economy are factors for which interventions have exclusive jurisdiction of Central Banks and the Administration Public. Regarding the former, have kept the price of money far below inflation for an excessive period of time and in a situation of high real economic growth . The result of this monetary policy is that there is no incentive to save (since it is clear that based on such premises to save money does not generate profit), and is promoted when lax lending for investment risk and low end studied, in fact, the money is lent with less weight in inverse proportion to the interest rate *. This produced a stratospheric growth of bank loans to invest in growth markets, one of which was the property market but not unique. The growth of financial engineering, (not only based on real estate products), degrees of mortgages and financial products implemented on real estate investments widened and internationalized high risk and little studied. In this factor, the principal would have to add huge amounts of money "B" who took refuge in the purchase of land when he entered the Euro.
As to the responsibility of Public Administration, already referred to many times the problem ** classification and management of land by public authorities as the only solution to avoid the speculation of the owners of land and undue price impact of this housing . The result of a reduced land supply in the market is generating an unsustainable growth in property prices.
Clearly there have been real estate speculators, developers eager for profits, and many benefited in the growth of housing prices, one might almost say that the desire to profit in Based on the growth of housing prices has been widespread. But, first, if we had a more conservative monetary policy and greater regulation of financial engineering products, and secondly, we had correctly applied the principles of our previous Land Law and land held active management is obviously not have produced such a bubble in housing and in general, a crisis of this magnitude. But it is always easier to blame the employers.
MBQ Group
