The new Housing Law is causing some consternation in the market. The consultancy EY has lowered its forecasts for build-to-rent by 30% for projected developments.
In economic theory, intervening in the natural pricing mechanism of any market between supply and demand ends up causing a drastic reduction in available supply in the medium term. In addition, supply tends to lose quality as bidders are only willing to put their “worst product on the market as they must trade below their equilibrium price”, Javier García-Mateo, partner in charge of real estate in the Strategy and Transactions Division, explained to Brainsre.news.
In the report ‘The Housing Property Telescope’, EY had projected the development of 504,000 homes by 2025, of which 28,000 would be build-to-rent projects. With the 30% correction, the number would fall to 18,000.
