The architects draw a break in the new construction of 2023 due to the uncertainty
Architects have worsened their prospects in relation to the behavior of new construction next year and draw a panorama of very contained activity in the case of housing rehabilitation. The effects of the war in Ukraine and the economic uncertainty are evident in the sector and reflect a break in activity between April and June, for the second consecutive quarter. In that period, the area approved for both modalities was reduced by 0.5%, according to the data handled by the Higher Council of Colleges of Architects of Spain (Cscae). The fear of professionals is that in the face of a situation plagued by clouds, direct aid to owners and the promotion of works charged to European Next Generation funds will not be mobilized.
In the case of new housing, although the number of approved properties is almost 10% higher in the third quarter than in the same period just before the covid pandemic, the architects confirm that in relation to the previous quarter they registered a fall of 4.1%. The fact that the data was positive at the start of the year allows the number of new approved homes to increase by 2.1% in the accumulated figure compared to the previous year, which was still marked by health restrictions.
In the third quarter there was also a sharp drop in homes approved for renovation, of 12.7%. The statistics offered by the Ministry of Transport, Mobility and Urban Agenda had previously revealed that new construction permits for residential use registered their lowest in two years in August. Is about one of the main indicators to know the evolution of the construction activity. Another of the most outstanding is the consumption of cement, which in September has already been down for five months in Spain.
Producers place the consumption of this material slightly above one million tons in September, 44,150 less than in the same month last year and an amount that is also lower than the figures recorded in September 2020. The increase in the cost of construction projects construction and the large number of deserted tenders due to high inflation, has caused companies to renounce many contracts and projects to be paralyzed. With this, it has been seen also affected the production of concrete. All of the above is added to a context of official rate hikes by the European Central Bank to tackle high inflation, hikes that translate into higher financing costs for companies in the sector and for families seeking to acquire a living place.
An uncertain situation
The Spanish economy stagnated in the third quarter, with a modest growth of 0.2%, according to the advance published recently by the National Institute of Statistics (INE). The Bank of Spain has warned that the cooling of consumption has added to the Loss of dynamism in housing investment between July and September. The entity led by Pablo Hernández de Cos stressed that this slowdown in investment in construction may last for the remainder of 2022 and throughout the first quarters of next year.
The outlook described by BBVA Research points to a slight contraction in home sales in 2023 -which will not, however, prevent the level of transactions from continuing to be high-. In their Real Estate Observatory for the second semester they also foresee that the initiation of new promotions stagnates and the price falls by around 2.4%. The report indicates that, although the cost of some construction materials has begun to fall compared to the maximum of the first semester, a good part of them remains at relatively high levels.
As the bottlenecks and the cost of transport are reduced, the reduction in the price of essential raw materials for the sector will be consolidated. The entity’s experts also point out another of the problems that has been affecting the sector for some time, the skilled labor shortage (which is reflected in the salary data agreed in agreements).
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