The real estate market has chained seven consecutive months of declines in home sales, which show the parallel decline of the mortgage firm. The demand for loans for the purchase of apartments has maintained in the third quarter of the year the downward trend undertaken in the previous months, according to a survey released this Tuesday by the Bank of Spain, which also points out that the conditions of the entities financial institutions for granting credit are becoming less and less advantageous.

Home sales decreased by 14.4% in August compared to the same month in 2022, according to data published this Tuesday by the National Institute of Statistics (INE).. In the eighth month of the year, a total of 49,252 transactions were carried out, a figure that exceeds the 48,303 operations registered in July but does not reach the high marks of the months of August of the last two years, when 49,900 and 57,550 sales and purchases were close. of homes respectively in 2021 and 2022. The year-on-year drop in August is the seventh consecutive – and the most pronounced – since the real estate market began to show the first symptoms of slowdown in February.

The downward trend in sales is framed in a context of high interest rates that makes access to financing difficult. The Bank of Spain published its Bank Loan Survey this Tuesday, according to which the demand for credit fell between July and September for the third consecutive quarter, while banks continued to tighten their conditions (interest, amount or guarantees required), which have accumulated six quarters of growth.

The criteria for loan approval have not only been strengthened compared to the second quarter in the granting of mortgages, but in all loans granted to families, while in the case of companies the level of tightening has been maintained. “The restrictive evolution of the credit supply would respond to the increase in risks perceived by financial entities, a lower tolerance for them, and, to a lesser extent, the deterioration of their liquidity,” explains the Bank of Spain, which indicates that rejected credit applications have increased in all modalities.

A good part of the risks perceived by financial institutions have to do with the interest rate increases undertaken by the European Central Bank (ECB).. The institution chaired by Christine Lagarde, which meets this Thursday to continue charting the path of monetary policy in the eurozone, has agreed to ten consecutive increases in just over a year, placing the main financing rate at 4.5% and the deposit facility by 4%, both unprecedented levels since the entry into circulation of the euro.

The monetary authority argued in its last meeting that “the ECB's official interest rates have reached levels that, maintained for a sufficiently long period, will contribute substantially to bringing inflation back to the 2% objective in a timely manner.”. The institution will decide on Thursday whether the increases have actually come to an end, although it has already warned that interest rates will remain high for as long as necessary to contain prices.

Rate increases are reflected in the conditions offered by financial institutions for granting loans. In fact, the increase in financing costs is precisely among the reasons why the demand for loans maintains a downward trend, according to the Bank of Spain survey, which, in the case of households, also attributes the decline to lower consumer confidence, greater use of savings and a worse outlook for the housing market. Banks' prospects are not good, as they expect the reduction in both supply and demand for loans to continue in the fourth quarter, although to a lesser extent.

A “cyclical” behavior

On the other hand, the outlook is more optimistic in the real estate sector.. Despite the year-on-year drop in sales, the 49,252 transactions registered in August exceed the average of the last fifteen years for the months of August, which barely exceeds 37,000 operations. In fact, the data known this Tuesday is the third highest for an eighth month of the year since 2008, only behind those of 2021 and 2022. 80.9% of the homes sold in August were second-hand – a total of 39,827 -, compared to 19.1% of new properties. Operations of both used and new construction apartments fell respectively by 15.9% and 7.3% compared to August 2022.

The General Council of the Official Colleges of Real Estate Agents of Spain recalls that the figures recorded in the periods 2016-2019 and 2021-2022 were very “positive” and point to the fact that the real estate market is “cyclical”, therefore who consider the current stabilization of sales data “normal”. In that sense, the Director of Studies at Fotocasa, María Matos, maintains that there is not “a slowdown” in the market, but rather a trend towards “accommodation” to the new economic situation, with high interest rates.

All forecasts point in the same direction: the Spanish economy will grow clearly above the eurozone as a whole in both 2023 and 2024. A surprising endurance that contrasts with the greater collapse in activity suffered during the coronavirus compared to European neighbors. However, these two phenomena are two sides of the same coin.. And a good part of the reasons that explain why the collapse of the Spanish GDP was so great in 2020 also help to understand why Spain is now doing better than the rest of Europe. The greater weight of tourism in the Spanish GDP, the lesser importance of the industry and the reduced dependence on China are the three key factors that explain the advantage that Spain has achieved.

This is how the Bank of Spain sees it, which presented a report this Monday in which it explains how the sectoral composition of the Spanish economy largely explains the better data that the country is showing compared to its neighbors.

The first factor at play is tourism, surely the element that best explains the differences in the growth forecast for this year. In Spain, the sector contributes 11.4% of the entire gross added value of the economy, compared to an average of 7.3% in the eurozone and 5.3% in countries like Germany, says the banking supervisor.. That is to say, tourism contributes more than a tenth of the value of what the Spanish economy produces once production costs have been discounted.

The greater weight of this sector compared to other countries amplifies the good results that have been obtained this year in tourist activities. In 2023, Spain has already recovered the number of foreign visitors it received before the pandemic and spending figures have skyrocketed to historic highs, driven by inflation. The recovery of tourism has given Spain a boost of oxygen that most countries have not been able to count on at a difficult time for the economy.. However, it is worth remembering that it was also, precisely, this strong dependence on tourism and contact services that explains why Spain sank more than anyone else in the eurozone during the pandemic.

The second differential factor that is helping Spain in this context is its lower dependence on industry.. The industrial sector is one of those that is experiencing the greatest difficulties as a result of the energy crisis unleashed in Europe after the war in Ukraine. Especially the manufacturing segment that most depends on energy for its manufacturing, such as the chemical industry, steel or cement. The Bank of Spain estimates that the manufacturing industry accounts for 2.5% of the gross added value of the Spanish economy, compared to 2.7% in the euro area and 3.3% in countries such as Germany.

In addition, there are other industries that have been affected by bottlenecks, but whose negative impact on the Spanish economy is diluted thanks to their lower weight in the GDP.. This is the case of the automobile industry, which in countries like Germany represents 4.4% of the added value of its economy, compared to 1.1% in Spain.

To these factors already mentioned, the Bank of Spain adds two other elements: lower commercial exposure to China and a gain in competitiveness compared to other countries.. Regarding China, the Bank of Spain points out that a slowdown in the Asian giant's economy “would have a lower impact on trade channels than on other neighboring countries.”. The added value that trade with China represents for Spain is 1.2%, compared to 2% in the euro zone or the 2.7% registered in Germany.

In addition, the banking supervisor points out that the lower rise in wages in Spain compared to other eurozone countries and the greater containment of prices also help explain why Spanish companies have improved their exports.

The endurance of tourism, key for 2024

The strength demonstrated by the Spanish economy during the first half of the year will be tested in the coming months. Once the peak season is over, and with the European economy stagnating, the engines that have driven growth until now will lose momentum.

One of the keys to future growth will be the tourism sector's ability to resist the slowdown.. The normalization of tourism after the pandemic and the end of the summer season could harm the sector. Furthermore, the Bank of Spain points out that the industry crisis could also affect the services that serve as suppliers.

This Tuesday, the European Commission urged EU countries to establish better and faster conditions so that the wind sector can deploy all its capacities to be able to install its share of renewable energy that the EU needs between now and 2030 and compete with China at a time when inflation, the high price of materials, the lack of qualified labor and insufficient state planning is undermining a sector that until now has been able to supply the entire European market. To this end, it has presented a series of measures, among which it urges EU governments to speed up the authorization processes for wind farms and “improve” public auctions, so that price is not the only award criterion and between in dispute others such as cybersecurity or guarantees of timely execution.

These two elements are part of the so-called “Wind Package” which, as Ursula von der Leyen announced in September, the Commission approved this Tuesday. The objective is to allow the wind sector, which until now has been able to assume the entire EU deployment, to continue doing so, at a time when the EU has to significantly increase the installation of wind power each year to reach the goal set for 2030 and in which, in the foreign market, it competes with giants like China.

As the Energy Commissioner, Kadris Simson, has explained, it is not about “closing” the European market to wind energy from China or other countries, but about “pampering” a domestic sector that until now has been able to take care of all the wind energy in the EU before running into obstacles such as the increase in the cost of components, the lack of predictability and drive on the part of the Member States and qualified personnel.

On a financial level, Brussels is willing to help by allowing this sector to access the 1.4 billion budgets – duplicated – of the Investment Fund, a specific line from the European Investment Bank and the State aid that the Commission encourages countries to grant. This push will be completed with the plan to strengthen electricity networks throughout the EU that it will present in November.

The Spanish wind sector has welcomed the package of measures, which it considers “an important support and boost for the wind sector to guarantee its competitiveness and meet the wind development objectives”, also in Spain, where the new National Integrated Plan Energy and Climate (PNIEC) foresees 62 gigawatts of onshore wind and three more of offshore wind by 2030.

The Wind Business Association (AEE) has “welcomed” measures that “are aimed at providing stability to supply chains and guaranteeing a fair playing field between different markets globally.”

Precisely this Tuesday, the Ministry of Ecological Transition has announced that it will allocate 185.7 million of European Next Generation funds to replace and repower 1,205 old wind turbines with 167 of the latest generation, so that with 86% less it will be possible to generate almost double of electricity. Within this same aid, another item will be allocated to the renovation of mini-hydraulic facilities of up to 10 megawatts and another to finance six projects to create the first treatment plants for wind blades and other components, in which it is expected that Spain can recycle everything. the annual volume of these volumes.

Faster and better auctions

In 2022, wind installations generated 16% of the electricity consumed by the EU and installed a capacity of 16 new gigawatts, which is a “record” figure but insufficient for the EU to meet its goal of having 500 GW in 2030.. This means installing 37 GW new each year by companies in a sector that are currently “underutilized” due to the “slow deployment of wind energy due to an appropriate demand forecast for wind turbines in the EU.” .

Faster licensing and auctions not just about prices

To reverse this situation, Brussels asks European governments to “accelerate deployment through a predictable and rapid authorization process”. They are encouraged to apply the new Renewable Directive now and to delimit the acceleration zones it contemplates so that the process lasts only one year at most.. And it creates the “Accele-RES” initiative to digitize the process and provide “technical assistance” to public administrations so that they are faster and train their staff, which is one of the reasons that have been identified in Spain to justify the collars of bottle in the authorizations.

To put an end to the 'stoppage' in the production chain that it attributes to insufficient planning, the Commission asks governments to “improve” their public auctions of wind energy. To begin with, being more “transparent” about the medium and long-term calendars. Regarding the substance, Brussels wants them to be awarded not only at the lowest price, but also for other factors such as digitalization, the added value of the equipment or the commitment to execute within the given period.

The AEE has stressed that the improvement of the auctions seeks to guarantee that “the turbines installed in Europe are cyber-secure and comply with defined labor and environmental standards” and requests that both the authorization and the auctions include “prequalification criteria, ensuring that they do not impact the cost competitiveness of the projects”.

100,000 trainings

Within the renewable energy sector, wind energy is one of those that requires the most qualified workforce and the Commission notes that there is a lack of workers with the necessary training. Therefore, it will facilitate the launch of training focused on the wind sector in the academies that will be launched in the Member States contemplated by the Zero Emissions Law.

As indicated this Tuesday, it expects that in three years it will be able to train 100,000 students.

unfair competition

In addition to strengthening the position of the European wind sector within the EU, Brussels wants to protect it from the world leader, China, which is supplying other countries whose markets it believes European companies could also enter.

To protect its competitiveness it will use a two-way approach. On the one hand, protect it from competitions that it considers unfair by monitoring possible unfair practices. On the other hand, seeking the arrival of the European wind industry to other markets through the trade agreements that the EU closes with them.

Like the typical domino effect, the confrontation between Israel and Hamas that has put the situation in the Middle East at maximum tension is already having consequences in the field of energy, with lower activity at the liquefied natural gas (LNG) plant in Egypt. , which could raise the international price of this raw material. This is what the European Commission considers, although at the moment it believes that gas supply is guaranteed in the EU from each winter to next, it does not rule out that such an uncertain situation makes it necessary to resort for a longer time to the emergency measures agreed to last year. passed in the midst of a price crisis due to the war in Ukraine, among which is also the Iberian mechanism to limit the price of electricity in Spain and Portugal, which expires in December. Energy Commissioner Kadris Simson stated this Tuesday that Brussels is “willing” to extend them if necessary.

“The European Commission has evaluated the market and has come to the conclusion that, today, with 98% of storage [of gas in the Member States] there is no immediate risk of gas shortages facing the winter, he said Simson. Specifically, Spain's gas warehouses have been at 100% capacity since October 16, according to Commission figures.

However, he added that the situation is full of “uncertainty” with regard to the world market for liquefied natural gas (LNG), the one that most feeds the European market after last year practically completely cutting off gas transit. Russian, by gas pipeline. The uncertain situation, he indicated, could be the result of a supply cut in Australia or in “Egyptian plants”, which in recent years were supplied from fields in Israel, which has suspended for security reasons since the Hamas attack on last October 7th.

Brussels believes that this may have an effect “on gas prices” and the Energy Commissioner has stated that “we will consult with our services and if it is necessary to prolong the measures, we are willing to do so.”

Price and consumption caps

The Iberian mechanism that since June last year put a cap on the price of the energy used to generate electricity if the price of gas exceeded a certain threshold – first 40 euros MWh, currently 62 euros – is one of the emergency measures that authorized the European Commission to help EU countries alleviate the high price of energy on their homes and businesses. After a first extension, the electricity price cap expires on December 31, if there is no other extension which, without specifically mentioning this instrument, the commissioner has not ruled out this Tuesday. It is an aspect on which Spanish Government sources remain silent for the moment.

Other emergency measures – in this case, general for all countries – also expire at the end of the year: a reduction in gas and electricity consumption, the creation of a tax on the extraordinary profits of oil or gas companies or the limit of 180 euros MWh at which electricity from a renewable or nuclear source would be paid if gas rose above that price again. This last measure, which cost a lot to agree on in the EU and which has never had to be used afterwards, is the one that has just set a precedent for a possible extension of other measures.. The agreement on the reform of the electricity market that the Twenty-seven reached last week contemplates an extension of the cap of 180 euros for six months, until June 2024.

End to fuel aid

The Commission has opened the door to other possible extensions on a day of great activity in the field of energy, with the approval of the so-called “Wind Package”, with measures to promote and protect the European wind industry, and the presentation of the report of on energy in the EU in 2023 to take stock of the path taken towards the ecological transition and identify the challenges that still lie ahead.

Among these challenges is the need that the three members of the Commission responsible for Energy and Climate insisted on this Tuesday for EU countries to eliminate the subsidies they still give to gas and other fossil fuels, such as the discount to the fuel that remains in Spain for the transport sector.

According to the report, these subsidies – which go against the international commitments to reduce emissions and that the EU also asks of other regions and countries – increased significantly last year, during the energy crisis and are still in place in 50%. European governments continue to provide aid worth a total of 64 billion euros to their homes and industries.

“They increased last year due to the crisis but this has to change,” warned Climate Action Commissioner Wopke Hoekstra.. “Most subsidies are anachronistic and do not help the transition. Fuels with subsidies that do not address energy poverty or the just transition must be eliminated as soon as possible,” he urged.. In the Spanish case, the Commission estimates the 'allowed' funds of the Just Transition Fund at 868 million.

Less Russia and more coal and renewables

Thanks largely precisely to the application of emergency measures and the deployment of renewable energy and efficiency as a consequence of the change in the energy model that the EU was forced to accelerate as a result of the Russian aggression against Ukraine, one of the main conclusions of the last energy year is that the EU is meeting its climate objectives. In 2022, their joint CO2 emissions decreased by 3%, achieving a reduction of 32.5% compared to 1990 levels. Furthermore, it was evident that the fight against climate change not only does not slow down economic growth, but is compatible with it.. EU GDP growth rose by 3.5% last year, even more than emissions cuts.

“The EU is fulfilling. Despite the difficulties of the energy crisis, we have improved compared to the previous year and pre-pandemic levels,” said the vice president and head of Climate of the community executive, Maros Sefcovic.

Despite the fact that, as the report also points out, the energy crisis caused the EU to burn more coal again to guarantee energy supply, in a year in which the Twenty-seven broke almost all of its ties with its largest energy supplier, Russia.. According to the report, the EU cut its imports of Russian oil by 90%, going from importing 155 bcm of gas in 2021 to just 80 bcm, with another cut in 2023 to just between 40 and 45.

Last year, the EU reduced its gas consumption by 18% and was able to set up a joint purchasing platform to achieve better prices that will soon hold the fourth round and which is expected to be successfully replicated to hydrogen purchases. renewable, with a first test auction in November. 2022 was also a “record year” in the deployment of renewables, with the installation of 60% more installed photovoltaic power than in 2021 (41 gigawatts more) and onshore and offshore wind, with 45% more than the year former. Brussels warns that there is still much to do in sectors such as transport or agriculture.

As for coal, Sefcovic has acknowledged that more use was made of this raw material with high CO2 emissions “to replace electricity production”, reduced from nuclear energy – largely due to breakdowns in the French park – and hydroelectric power, for example. widespread drought. “But it is a short-term effect,” said the vice president of the Commission.

The strength of the labor market in recent times has boosted employment among the foreign population. Two out of every five jobs created in the last year are occupied by foreign workers, whose volume has gradually recovered from the collapse suffered after the 2008 crisis and has reached record numbers in the last decade. “There is work and that is essential for attracting the foreign population,” explains sociologist Pau Miret, researcher at the Center for Demographic Studies of the Generalitat of Catalonia.

In September, Social Security gained an average of 10,462 foreign workers compared to the month of August, adding a total of 2,686,990 foreign workers, according to the latest data released by the Ministry of Inclusion.. The rebound has returned foreign membership to the upward path it abandoned in July and August, after exceeding 2,698,604 contributors in June, the highest figure in at least fifteen years. Only in the last year, since September 2022, 230,971 jobs occupied by foreign workers have been created, which represents an interannual increase of 9.4% and the largest increase in absolute terms for a ninth month of the year in more than a decade .

The growth in the affiliation of foreigners is framed in a general context of prosperity in the labor market. In the last year, 544,508 jobs have been created in Spain, of which 42.4% are occupied by foreigners. Foreign workers currently represent 12.9% of the total number of Social Security affiliates, which exceeds 20.7 million contributors and stands at record numbers, never before seen in historical series.. Since April 2020, when the pandemic dealt a severe blow to the labor market, the number of workers has grown by more than 2.2 million people, of which a third are foreigners.

“The first thing a migrant looks for before anything else is to find a job that allows them to survive; employment is essential for attracting the foreign population,” notes Miret, who recalls that every immigrant pursues “a better life.” “In Spain we have a low salary level within Europe, but, compared to other countries of origin, the situation is much better,” explains economist Florentino Felgueroso, researcher at the Foundation for Applied Economic Studies (Fedea), who adds Among the attractions of Spain as a country that receives immigration is its security and the offer of social and health services.

A gradual growth

“The membership of foreigners has not grown suddenly, but rather there is an upward trend,” says Felgueroso, who points out that the current record figures are nothing more than the result of the progressive recovery of employment levels prior to the crisis. 2008. Contrary to what is currently happening, the bursting of the real estate bubble three decades ago forced a good part of the immigrant population—and also the national population—to leave Spain due to lack of employment.

After hitting bottom in January 2014, foreign employment has gradually recovered over the last decade, during which the number of foreign workers in Spain has gone from barely exceeding 1.5 million employed people to almost 2. 7 million. That is, in just under ten years, the affiliation of foreigners to Social Security has increased by 70%. Growth has been pronounced after the pandemic with year-on-year increases of more than 8%.

Among the 230,971 foreign jobs created in the last year, 20.5% are occupied by Colombian workers. This is one of the nationalities whose presence has grown the most compared to September 2022, with an increase of 47,373 people. Also noteworthy is the increase in the volume of Venezuelan and Moroccan workers, which has increased by 25,782 and 22,913 people respectively.. These three nationalities are among the five most numerous in the total number of foreign workers (309,639 Moroccans, 171,982 Colombians and 146,126 Venezuelans), along with the Romanian (337,765) and the Italians (182,757).

In addition, 43% of the foreign workers that Social Security has gained in the last year are between 35 and 54 years old, compared to 40.8% under 35 years old and 16.2% over 54. “The population immigrant has been getting older. Many have already been in Spain for years, but increasingly older and younger people are also coming,” says Felgueroso, who adds that the number of migrant women has also grown in recent years.. Currently, women represent 44.5% of foreign workers employed in Spain, while men represent 55.5% of the total.

Hospitality and commerce

The volume of qualified workers has also increased among the immigrant population in recent years.. “Many times they come to fill positions where there are bottlenecks, where we cannot find workers or we do not have enough workers,” says Felgueroso, who gives the health sector as an example.. Health currently employs 107,120 foreign workers. “If they weren't there, the shortage would be even greater,” he adds.

However, Miret highlights that the majority of employed immigrants occupy precarious jobs.. “Foreigners with low qualifications and even those who have high qualifications but cannot validate them look for the jobs they find, which are normally in the most precarious sectors and where there is a broader labor market,” he explains.. “Due to lack of resources, immigrants are willing to accept jobs that are unacceptable for a large part of the national population,” he insists.

In fact, in the last year the sectors that concentrate the most workers are precisely those in which the membership of foreigners has grown the most.. Specifically, the hospitality industry has gained 50,663 foreign workers, while commerce and construction have respectively added 29,158 and 23,264 more employees than a year ago.. The number of foreign self-employed people has also grown by 25,986 people. The majority of foreign self-employed workers are concentrated in the commerce sector, which brings together 101,602 foreign affiliates, and the nationality with the most presence is Chinese, which represents 14.9% of the total.

Support for the economy

“On an economic level, immigration is absolutely fundamental,” emphasizes Felgueroso. The importance that the foreign population plays in the Spanish economy is seen, for example, in the Budget Plan that the Government has recently sent to Brussels, in which it forecasts a growth in Spanish GDP of 2.4% for 2023 and 2% by 2024.

The Executive bases this economic progress on a growth in the Spanish population much higher than the historical average driven by the arrival of the immigrant population. “The demand for migratory flows is driven by demographic change and the positive evolution of the labor market, which generates population growth greater than the growth of the potential labor force,” acknowledges the document sent to the European Commission.

The end of the upward trend in foreign occupation seems not to be near. “As long as there is employment growth, the immigrant population will continue to increase,” says Felgueroso. “In the coming years it is expected that there will be a growth rate similar to the current one or that it may even increase, because in addition, people who travel generate networks and make the path easier for the next ones to come,” explains the economist. while highlighting the “integrative” attitude of the Spanish population towards immigration. “As long as there is employment and there is no visceral rejection by the native population, immigrants will continue to arrive,” he concludes.