The first mass demonstration against high rent prices, with more than 50,000 people gathering this Sunday in Madrid, strongly confirms that housing is one of the urgent issues of our time.
Spain is by no means the only country experiencing tight housing supply. But it is one of those most affected by the real estate bubble, which left traces which largely explain the imbalances weighing on our residential market.
The price per square meter has skyrocketed in almost all provincial capitals. And over the last thirty years, the cost of housing has increased by 43% more than the purchasing power of Spaniards. This problem particularly affects young people, many of whom spend more than half of their income on paying rent.
If this is not remedied, the impact of the difficulty of access to housing will be felt beyond the economic dimension. Demographically, because this means that young Spaniards have one of the lowest emancipation rates in Europe. And politically, because This will fuel inequality and a generation gap that could break the social contract.
But in the face of a social emergency, it is natural for visceral proposals or demagogic solutions to emerge. In the same spirit, the Tenants’ Union has threatened to launch a “rent strike” to stop paying rent to landlords. And also the regulatory shortcuts of those who see state intervention as the only way to lower rent prices, such as the government’s housing law.
The housing question is one that makes true the saying that an economist does not answer Yeah either Nobut it depends. Because The solutions that worked in Vienna might not work in Paris, as is indeed the case.
It is evident that there is a mismatch between supply and demand in the real estate market. But the default option cannot be to set caps on the rental price. Which, as the IMF has shown, generally ends up producing the opposite effects to those desired, causing a reduction in supply and a consequent increase in prices.
On the other side, there are those who boil down the solution to the housing crisis to building more housing. But Spain has already seen during the crisis that brick-and-mortar financing and uncontrolled land liberalization increase the demand and price of home ownership and can generate real estate bubbles.
It is obvious that the only truly functional solutions are mixed solutions.. That is to say, those which act simultaneously on demand and supply, regulating or liberalizing in each case.
To reduce demand, the first thing to do is to abandon public aid for rental or purchase, which only increases prices. It is also possible to limit the purchase of housing by foreign speculators, as well as restrict the number of properties dedicated to tourism. The moratorium on seasonal rentals is in fact applied in more and more cities of different political parties.
But at the same time, the main thing is to correct the housing deficit. And to increase the supply, The option most recommended by experts is to encourage owners to put their properties on the rental market. A path that includes tax relief for the owners of the many empty houses that exist in Spain, as well as improved legal certainty and a reduction in bureaucracy.
Only the iron mental dichotomies according to ideological blockages explain why, for many, a housing policy including both dissuasive measures against squatting and an increase in the stock of social housing for rent at affordable prices is not compatible.
Neither the demonization of landlords nor the repetition of proposals that have already proven to be misguided will help change an urgent situation that requires a careful, flexible and comprehensive approach.
