Housing prices in Europe have increased exponentially in recent years. According to Eurostat data, prices and rents have respectively ascended 47% and 18% between 2010 and 2022. Similarly, Spain has been suffering from rising housing prices since 2014. The situation has been aggravated by the unequal growth between the housing on offer and demand. Millions of Spanish citizens face a constant fight to find a suitable home to live in. In most cases, affordability does not concur with quality and public policies fail to cover the majority of their targeted population.
A variety of phenomena overlap with the skyrocketing of housing prices. Ever-growing gentrification processes afflicting urban areas revalorize land value and displace low-income households to the margins of society. This suburbanisation of poverty exacerbates inequalities while furthering the risk of social exclusion. In other cases, the growing difficulty in affording living costs pushes people to minimise expenses in order to subsist, which often leads to precarious housing conditions. From houses without windows to overcrowded spaces and abusive rental agreements, people have suffered all types of precarity. These are just some of the recurring elements found in the horror stories of living in big European cities like Madrid, Barcelona, London, or Amsterdam. One of the main solutions to this issue – ownership – has become virtually impossible to attain. Practically no one can buy a house in Spain. To keep a roof over one’s head means subjecting oneself to renting. Furthermore, the youth’s dream of emancipating from their parents after university is a mere fantasy nowadays.
Many remedies have fallen flat. In response to October's massive protest gathered in Madrid against housing prices, Spanish PM Pedro Sánchez announced a 200 million extension in aid for young renters. The youth, leaders of the demands, seemed dissatisfied with the proposed measure. Strict eligibility requirements including static and unrealistic price ranges eroded the efficiency of previous support initiatives. It barely covered 0,6% of the population between the ages of 18 to 35. Critics were soon to come regarding the workability of this scheme, even from fellow leftists. They allege that plain economic aid for renting is counterproductive if owners are able to inflate the prices in response. What we really need, it seems, is an effective cap on the price of rent. Yolanda Díaz, Second Vice President and Spanish minister for labour and social economy, questioned the real beneficiary of the policy, labelling it “public money for rentiers”. This episode is a perfect example of the paltry amount of consensus amongst policymakers and stakeholders in the housing dilemma.
At the beginning of December Sánchez announced a plan to create a new public housing company. Although no details on how this company would operate have been broadcasted, it has been met with widespread scepticism. The idea aspires to recreate the success of similar enterprises in countries like Denmark, where 20% of houses are state protected. The state would be responsible for building and managing the property at a national level. However, Spain already has a public entity called Sareb, a ‘bad bank’ in charge of liquidating toxic real estate assets produced by the 2008-2014 crisis, that fulfils a similar commitment. Critics fear a calamitously unproductive clash between the new public housing company and Sareb. Logically, Sareb would have to be wound down. Once it's gone, the new company would absorb the houses under Sareb’s management, providing the new public housing company with already built houses to begin with. But the company’s challenges are much more than just dispatching Sareb. A series of political and market limitations must be taken into account as well. Spain’s housing competences fall under the purview of local administration. Duplicating local efforts with national ones is a roadmap to inefficiency. If Pedro Sánchez really wants to pull this off, he must merge his national company with locals, which will precipitate a panoply of disagreements at all political levels. Lessons from Valencia’s recent devastating flood showcase the incapability of the Spanish government to coordinate with local entities. Against such a landscape, how can a nation-wide housing company hope to be the panacea it must be? Additionally, by entering the market, the new company would have to compete against private housing. Significantly lower prices must be granted. To allow such prices, the government needs to start seriously investing in housing. Spain’s budget allocated to housing amounts to only 0.3% of total GDP, a long way from the average 1% in the European Union. While good on paper, there still is a lot more thinking to be done to get the new company shipshape.
Spain’s new public housing company already seems yet another empty promise. By being a long-term plan, it requires commitment from parties across the political spectrum to keep building once the socialist government is gone. Spain is late to keep pace with European level housing initiatives, but this new company might nevertheless be a first step in the right direction. One thing is clear: housing must be wrestled free of the private market’s exclusive control. However, ensuring housing availability is not the only path to alleviating the housing crisis. Action is equally required across the broader property and land economies. It is still necessary to keep promoting permanent contracts, end tax credits and prohibit the purchase of housing for non-residential purposes so everyone can afford a home.
Image: Wikimedia Commons/Arne Müseler
Photo/Map: Arne Müseler/arne-mueseler.com
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