Guindos (ECB) criticizes housing policies for creating "bottlenecks"

BarcelonaThe Vice President of the European Central Bank (ECB), Luis de Guindos, asserted this Wednesday that housing policies, especially those affecting rentals, have created "bottlenecks" in the market that partly explain the rising prices in the sector. Guindos praised the fact that the Spanish economy is growing, largely thanks to the arrival of foreign immigration, but contrasted this with the fact that "the housing supply is very limited."

"It is a political problem at the highest level, especially for the younger generations," asserted the former Minister of Economy in Mariano Rajoy's government, who participated in the Barcelona Real Assets Meeting, a gathering of the real estate sector. In this regard, he explained that the ECB, whose sole mandate is to control the prices of consumer goods paid for by citizens, takes housing prices into account, although the European Statistics Agency, Eurostat, does not fully include them in its inflation calculations. If this were taken into account, he added, the rising price of housing across the eurozone would, in some cases, "aggravate the real inflation rate" that families are experiencing.

The ECB Vice President has asserted that Spain is one of the countries where housing prices have risen the most in Europe, something that, in his opinion, is explained by several reasons. The first is the influx of large numbers of immigrants into the country, resulting in the establishment of an average of "300,000 new homes each year." Guindos believes that the arrival of new "orderly" immigration to Spain is "very good" and "absolutely necessary," since it has been one of the drivers of growth in the Spanish economy (and also in Catalonia), which has seen increases far above the European average for three years.

The other side of the coin, according to Guindos, is that while there has been population growth due to the arrival of newcomers, "the housing supply is very limited." Thus, the immigration-based growth model "is encountering bottlenecks" in the housing market. Guindos opined that this problem is particularly acute in the rental market, rather than in the sales market.

In this regard, the ECB Vice President offered a veiled criticism of some policies that attempt to limit housing prices, especially in the rental market: "Good intentions, hell is full," he said, referring to price caps.

Barcelona is one of the municipalities that has implemented a maximum price policy for rental apartments despite strong criticism from employers. The results were: prices fell, but at the same time there has been a large transfer of apartments from the traditional rental market to short-term contracts (less than one year old) intended mainly for tourists and expats, since the regulations left them outside the cap.

No financial bubble

In his speech in Barcelona, ​​Guindos ruled out the possibility that rising housing prices were caused by a bubble of easy financial credit, as occurred during the 2008 crisis. "It's not credit that's pushing up prices," he said, as despite the sharp increases in apartment prices between 2019 and 2025, the increase was significant.