Real Estate Market Must Correct Itself
May 13th, 2008
Minister for Tax and the Economy, Pedro Solbes, told the Economy and Tax Commission in Congress that he is against intervention to halt the adjustment in the market.
Solbes, has said that he is against doing anything to halt the adjustment of ‘the excesses’ of the construction industry which had been seen over recent years.
Earlier in the week the Minister admitted that the slow-down in the sector had been far quicker than he had expected, but his comments today before the Economy and Tax Commission in Congress show that he thinks the market needs to correct itself, so that investment in residential property ‘can return to normal levels of growth’. He said that the economy would return to growth levels of 3% in the year 2010.
It means Solbes has dismissed a request from the Banks and Savings Banks Associations which had called on the Government to use the Pensions Fund to help finance the real estate and construction crisis. He said that a budgetary deficit would have to be assumed given the economic slowdown.
Solbes also told the Economy and Tax Commission in Congress that the cabinet was going to reorder how the financial system and sector is supervised in Spain. He said that a ‘double control’ model already existed in other countries and that such a system here would see supervision divided between the Bank of Spain and the CNMV, The National Commission for Market Values, with the Bank checking on solvency levels and the CNMV checking on company behaviour.
The PP spokesman on the Commission, Cristóbal Montoro, had said there was ‘nothing new under the son’ from the Minister.
The statement by the Minister for Tax and the Economy, Pedro Solbes, that the construction sector in Spain needs to ride out a needed correction has unsurprisingly not been welcomed by the companies and promoters in the sector. The real estate promoters have called for a better diagnosis as to what is going on and why, and have called on the Minister to make fewer ‘frivolous’ speeches. The President of the Promoters’ and Constructors in Spain, APCE, Guillermo Chicote, has said that the government is ‘fighting pneumonia with cough drops’ and should look out for the bankruptcies which would be arriving ‘like figs in September’. Chicote said the problem was so acute, it cannot be solved by a little speech.
Full story from TypicallySpanish.com
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