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the formula of some markets to lower housing prices

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the formula of some markets to lower housing prices

It is not easy to buy a house. Even the Bank of Spain (BDE) recognizes this, which in a report published this summer calculated that the number of young people who own a home —which includes both those who have just paid for it and those who have simply formalized a mortgage and paid the down payment—has plummeted in the last decade: if in 2011 almost 70% of households under 35 were homeowners, in 2020 that percentage has fallen to 36%.

It is not the only indicator that portrays how difficult it is for the youngest to find a home, either owned or rented. And for sample, a button… or a couple of data, if necessary.

According to the Spanish Youth Council, at the end of 2020 the youth emancipation rate was around 15.8%, the lowest figure in more than two decades. The same organization estimated that for a person the theoretical cost of renting a home alone was equivalent to 91.6% of their salary. If there was talk of purchase, the data dropped to 55.1% of the payroll, well below it, true; but an equally high figure if we take into account the difficulties accessing finance. In summary, those under 30 years of age allocated more than 30% of their salaries to paying for housing.

A solution… with exposed brick

The data paints a complex scenario, but there would be a way to smooth it out. And in some markets they seem to have hit on it: selling “half-finished” houses or, at least, without all the finishes that we are used to seeing in a flat ready for its owners to occupy. It is not that it lacks furniture or luxuries. No. Directly, they can be delivered to the buyer with exposed mortar walls, exposed pipes or rooms without doors.

The solution is called “gray work apartments” and, although it may seem shocking at first to see real estate for sale in which it seems more reasonable to imagine masons than families, there are good reasons why it has penetrated the market. A review of real estate portals shows that not an uncommon option in Colombia or Venezuela. Even in Spain there are offers that use the gray work label and show interiors without the final finishes.

The main advantage, explains a construction company from Cali, is a more than notable saving in the purchase: “Acquiring a project in gray work usually implies buying it in the initial stage of construction, so the cost is 20% cheaper, approximately, compared to the same project in its final phase”. Another plus that she offers with respect to the houses already completed is that speed up the process of construction and, of course, allows each future tenant to adapt the finishes to their own tastes… and, of course, to their budget and the tempo that manages to invest it.

“In case you have little savings for the finishes in the delivery of the apartment, you can wait and do them little by little or opt for cheaper materials,” highlights the same construction company, which emphasizes that these spaces may not include finishes, but they are ” habitable”.

They are not the only ones to emphasize that nuance.

Portals and Colombian companies dedicated to their promotion stress that they are not in poor condition or unfinished. “Nope. The spaces are already conceived and the house is habitable”, influences another company from Medellín before citing some of its characteristics: the structures are finished and with services and include “exterior door” and windows already installed. The company points out, yes, that the floors are usually delivered with the leveled mortar, the walls plastered without painting or only with the first layer of material and the installation of furniture is not contemplated either.

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The formula seems to work in your real estate market.

At least that is what the Metro Cuadrado portal points out, which states, citing data from the Colombian Chamber of Construction (Camacol), that the supply of gray work has experienced a considerable increase and forced families to include in their cost forecasts the investment that they will have to allocate to the finishes. The Camacol data would point to the fact that 68% of the buyers of this type of housing in Bogotá have ended up making improvements for an average value of 17 million pesos, about 3,400 euros, equivalent, they say, to the 10.9% of the total value.

One of the keys to its success could be that the delivery in gray work is a common option among social interest housing (VIS), those that are adjusted to a maximum value calculated based on the minimum wage. “The VIS was conceived by the government as a house with the basic conditions to be inhabited. There is a misconception that the builder delivers it in poor condition or in an unfinished state. However, it is 100% habitable”, settles the Super Owners portal, which breaks down the characteristics that these constructions meet “90%” of the time.

What features are those? The portal explains that the structure is usually completely finished, in addition to a door, windows and public services; but precise: the walls usually present the exposed brick and mortar or unpainted, if there is more than one bathroom, only one is finished, the rooms do not usually have doors, the pipes are exposed and usually the ceilings are not finished either, to the point that the finish of the cement plate can be seen.

No one said owning was easy. Not fast.

Cover image: Jnzl’s Photos (Flickr)

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