The solution to house prices increase is to build more houses, but the protests demand to freeze prices instead of building more. Are they dumb or is it intentional to keep their cities small and exclusive?
There is a lot of empty housing in this cities, and big real state corps have fiscal advantage to take over any new building so that would not fully solve the problem in Spain at least.
people down vote me but is true, real state companies with status like socimis have 95% discount in transfer tax. For example if they buy an used house in Barcelona, they pay just 0.5% transfer tax, while everyone else have to pay 10%.
From experience, a lot of older people do not understand how hard it is to get an in-demand apartment, especially if rent controlled. They get the price/rent and they know that they personally dont want to pay for more housing (by having said housing built in their backyard). So this aligns with their personal preferance.
Nothing wrong with estate funds owning homes as long as you keep building. They will invest at slight profits and that is why to give flexibility that renters need.
Just need to prevent them from hoarding land or delaying building.
> Madrid has 3.4Mln people and is the second-largest city in the EU. How big do you want it to become?
Bigger, obviously. Because the number of people who want to live in Madrid or visit it is higher than that. This can create a lot of economic surplus. Part of that surplus can be used to pay off locals (e.g. with subsidized housing in the newly built stock) so they win too.
The root problem, as far as I can tell, is that there's no socially accepted system for paying off locals to allow construction. So locals end up resisting growth, because there's nothing in it for them except higher rents, and everyone loses.
Last time they touched the housing laws one of the brilliant things they did was to force the owner of the flat to pay the expenses for signing the leasing contract of their tenants, before that change this was paid by the tenant. What happened is the landlords switched from long term rentals to short term rentals because they did not modify that clause for those type of rentals, so the tenants got the worse outcome: rental contracts of 11 months instead of 5 years, which also opens the door to massive rent increases every 11 months or eviction instead of just the inflation rate of the year under the other contracts.
They also keep increasing the difficulty of evicting non paying tenants, taking a lot of rentals out of the market because owners are simply afraid of not being able to evict a non paying tenant, or making prices increase to account for that risk.
> was to force the owner of the flat to pay the expenses for signing the leasing contract of their tenants
The reality is, anyone renting in Spain can readily tell you things don't work this way, if you query this, they go with someone else. Tenants paying the contract fee has an enormous momentum and it's way to easy for landlords to ignore it, in our hot housing market.
I also reject "just building more", at least in already too big cities. I think a more viable long-term approach would be to foster the economy in such way that creates more jobs in smaller cities. Spain needs cities like "Düsseldorf" or "Austin".
I am sceptical of this kind of central planning. Fighting against organic growth and artificially trying to increase jobs in other cities seems like it would cost a lot more as a whole than trying to solve the problem where it actually exists.
You are right to be sceptical and should be. However in this particular case, what we see today, is exactly the outcome of central planning, from the previous regime that ended in the 70s, which effectively decimated industry on the countryside and forced everyone to live in large cities.
You keep building until everyone has a house. There is no such thing as "too big".
The Dutch government designed entire cities and reclaimed land from the sea in the 1970s and it's already full. Human civilization is endless growth or death.
Tokyo has almost 15 million and works very well as a city. China is building many new cities close to the big cities to allow housing. The young population needs to live in the big cities because where the jobs are. Freezing prices will not solve the problem for the vast majority of the people besides the ones that were lucky to born in the place before the freeze.
Look at traffic jams, if what you claimed was true, then traffic jams in LA should never happen.
Building homes and all the supporting infrastructure from roads, schools or even parks takes a lot of time and money. The movement of tourists for example is always going to be significantly quicker, because its very easy to move a bus of people to Madrid, while it takes years to build a home for them.
Yes because these same old people contributed significantly to building the country. ALl the schools, roads, houses, buildings for this and that are only here because of them.
This article does an abysmal job of describing the situation, but I hope a skeptical reader will realize that something is very odd when they notice that these protests are directed against the opposition and not against the government.
What's so hard to understand? The opposition blocked the (minority) government's legislation, so people are protesting the opposition's actions. Maybe not a common occurrence, but seem's pretty straightforward to me.
I don't understand what you mean. There were social protests against the current situation; the government took steps to improve it, and most of the opposition parties rejected those measures. The current social protests are directed against the opposition, which is responsible for the situation remaining the same. What should Spain ask the government to do?
The current government has only worsened the situation and now somehow they want to be the champions of fixing after almost 8 years in power. They are not fooling anybody.
Seen them yes, but the polls say otherwise, if elections were to happen now the majority of the parliament will be composed of the current opposition parties.
This term started with the wrong foot anyway, there’s a feeble majority that included a right wing party from Catalonia that based their political support to the governing left just based on the promise of judicial favours (pardons for crimes related to the Catalonia independence movement/crisis). It’s precisely that party that voted no on the emergency decree they wanted to have regarding the housing crisis.
It's difficult to comment on news like this, if there was a good, fast solution, it would have been enacted by now. I do somewhat agree that more renter protection is unlikely to solve much. Spain had years of complete eviction bans, meaning even if you completely default on your rent, the owner couldn't do anything. Even if a court ordered removal, enforcement was impossible.
This lady was living in a very desirable, central area of Madrid, paying peanuts for rent. Think Central Park rent for $500.
The spanish public generally doesn't want to, "build more", as they reject megacities. One of the biggest problem is there are no good, viable second and third-tier cities that have jobs. While there are very cheap places on the countryside, no one wants to live there as there are no jobs.
A complex solution would help: Canada-style ban of non-resident ownership, at least in stressed areas, "building more", but not in Madrid, Barcelona or Valencia, and in parallel, boost small businesses and remote work to help de-centralize living. However I don't think any country really cracked the code how to fix housing.
As Iberian, the reality on the other side is unfortunately quite similar, the remote working part is spot on.
We have a very strong culture regarding office work, meaning those in charge.
When I see news or talk to friends, relatives, it seems the daily reality is eons away from central, northern Europe regarding remote, even after covid.
So it is back to either living on the city center, or spending 4 hours a day commuting from the city outskirts, with several connections, and various timetables.
While at the same time, we have those sponsored housing, and gold visas, for digital nomads with US salaries, which make natives very unhappy not being able to afford rentals priced for foreigner purses.
Those making TikTok and YouTube Shorts videos how living in Portugal and Spain is so great, the food and the "cheap" prices.
Yes, exactly, I agree. I'd argue that's what the smaller, viable cities would fix: in Germany, big cities are equally expensive, but you can rent a very nice flat for 5-600 euros, in Erlangen, Nürnberg, Dortmund, Jena, etc. Spain has a lot of available space and great infrastructure, with fast trains and fiber internet everywhere. As a thought experiment, it would be pretty cool if Spain could create a digital city, in say, Teruel province, with brand new housing and high added value jobs, perhaps paired with lowered company taxes to attract companies settling. Perhaps it would also achieve nothing, I'm just brainstorming here.
46 comments
[ 4.6 ms ] story [ 18.8 ms ] threadBan AirBnB's and ban estate funds from owning homes.
Just need to prevent them from hoarding land or delaying building.
Bigger, obviously. Because the number of people who want to live in Madrid or visit it is higher than that. This can create a lot of economic surplus. Part of that surplus can be used to pay off locals (e.g. with subsidized housing in the newly built stock) so they win too.
The root problem, as far as I can tell, is that there's no socially accepted system for paying off locals to allow construction. So locals end up resisting growth, because there's nothing in it for them except higher rents, and everyone loses.
They also keep increasing the difficulty of evicting non paying tenants, taking a lot of rentals out of the market because owners are simply afraid of not being able to evict a non paying tenant, or making prices increase to account for that risk.
The reality is, anyone renting in Spain can readily tell you things don't work this way, if you query this, they go with someone else. Tenants paying the contract fee has an enormous momentum and it's way to easy for landlords to ignore it, in our hot housing market.
The Dutch government designed entire cities and reclaimed land from the sea in the 1970s and it's already full. Human civilization is endless growth or death.
Look at traffic jams, if what you claimed was true, then traffic jams in LA should never happen.
Building homes and all the supporting infrastructure from roads, schools or even parks takes a lot of time and money. The movement of tourists for example is always going to be significantly quicker, because its very easy to move a bus of people to Madrid, while it takes years to build a home for them.
I empathize with a universal right to housing, but is that a universal right to a house in East village NY, Marina SF or El Retiro Madrid?
For everybody?
Or only for those who got in, in the 90’s?
How does that seem fair?
These details have to be worked out before you can get the public to commit to one of these and just rioting in response will only get you so far.
Not Italians, though.
This term started with the wrong foot anyway, there’s a feeble majority that included a right wing party from Catalonia that based their political support to the governing left just based on the promise of judicial favours (pardons for crimes related to the Catalonia independence movement/crisis). It’s precisely that party that voted no on the emergency decree they wanted to have regarding the housing crisis.
This lady was living in a very desirable, central area of Madrid, paying peanuts for rent. Think Central Park rent for $500.
The spanish public generally doesn't want to, "build more", as they reject megacities. One of the biggest problem is there are no good, viable second and third-tier cities that have jobs. While there are very cheap places on the countryside, no one wants to live there as there are no jobs.
A complex solution would help: Canada-style ban of non-resident ownership, at least in stressed areas, "building more", but not in Madrid, Barcelona or Valencia, and in parallel, boost small businesses and remote work to help de-centralize living. However I don't think any country really cracked the code how to fix housing.
We have a very strong culture regarding office work, meaning those in charge.
When I see news or talk to friends, relatives, it seems the daily reality is eons away from central, northern Europe regarding remote, even after covid.
So it is back to either living on the city center, or spending 4 hours a day commuting from the city outskirts, with several connections, and various timetables.
While at the same time, we have those sponsored housing, and gold visas, for digital nomads with US salaries, which make natives very unhappy not being able to afford rentals priced for foreigner purses.
Those making TikTok and YouTube Shorts videos how living in Portugal and Spain is so great, the food and the "cheap" prices.
Why? Is it the law that governments have to a) be on your side? Or b) be effective?
Your underlying assumption is completely
That's mostly how Switzerland is tackling this problem. Definitely not by building more