Jorge Galindo: "We are fixated on thinking that building is not progressive."

BarcelonaJorge Galindo (Valencia, 1985) is deputy director of EsadeEcPol and holds a PhD in sociology from the University of Geneva. He has published Three million homes (Debate), a book with a clear thesis: we need to build a lot more housing.

Housing has become the main problem facing citizens. Why have we reached this point?

— Because for many years we didn't make housing a priority. During the bubble, housing was prioritized as an engine of credit-based growth. Then so many environmental, cultural, and administrative requirements were imposed that made any alternative project difficult. When demand came, we didn't have the necessary instruments. We don't want to repeat the use of credit, and other instruments were limited by previous decisions. At no point have we made access to affordable housing a priority.

In your book, you argue that the central question for public policy should be what policy helps reduce scarcity. Has this failed in most recent measures?

— Yes. Many policies seek "how to do it," focusing on the existing stock rather than increasing supply. A paradigmatic example is rent control: it reduces prices but also negatively affects supply, thus creating a zero-sum policy.

But as long as the market remains zero-sum, access is granted to those who can afford it. What regulation would prioritize access to those who buy or rent to live?

— One is to rethink the regulation of long-term rentals; if it's indefinite, if not... But now the main problem is how poorly we distribute the risk involved in renting. I don't understand why there isn't default insurance, like in France. Another is social rentals, new construction, or state-mediated rentals. And we also have a problem of diversion toward the tourist market, so in certain places, a scalpel policy of measured taxes could be implemented in areas where this has happened. It would also make sense to define sales taxes in a way that favors the purchase and sale of first-time homes and penalizes sales that won't be used for long-term rentals. And also measures that incentivize the purchase and sale of first-time homes, but always expanding the supply.

The book's thesis is clear: we need to build a lot more. But some argue that it's not the solution because during the bubble, a lot of construction took place and prices didn't come down. What would you say to them?

— I would tell them they're drawing the wrong lesson from the bubble. The right lesson is that we shouldn't let a river of credit flood the country. Fortunately, we've established a series of regulations that discourage this. I would add to this that we have pretty solid evidence that building where people want to live does help reduce prices. And there are studies in the US that show that new construction can make apartments in the same neighborhood cheaper.

Is there a certain fear of building due to the trauma of the bubble?

— Yes, there was a flight from the sector, and there's a certain stigma attached to the new generations. That's why there's a labor shortage. There's also a generational fixation on the part of young politicians, but it doesn't take into account the crucial difference in credit and the fact that construction wasn't being done where people wanted to live. However, the problem doesn't go away. When I talk to my friends from other countries, especially from Latin America, who are quite left-wing, they're surprised by the position that construction isn't progressive. Our generation in particular has a harmful fixation, because it's not empirically correct. Construction is progressive.

He also mentions vacant housing, one of the elements that shapes the debate about building more. But he lowers his expectations.

— Most vacant housing in Spain is poorly located or located in sparsely populated, unsold Spain and is not easily mobilized. The new unsold housing stock is limited and often in places where people do not want to live. Empirical data varies: the INE estimates 75,000 vacant homes in Barcelona, ​​but the 2019 municipal census confirmed 10,000 out of 100,000 visited. In short, the useful surplus supply is much lower than thought, and mobilization depends on location, quality, and market incentives.

In the book, you avoid the dichotomy between rights and assets, and present housing as a "platform of opportunities." Does that mean accepting that it will always be considered an asset?

— It means recognizing that housing is both a right and an asset, but prioritizing its function as a foundation for vital projects. It allows for the design of policies that facilitate building where people want to live and limiting interventions that only protect those who already have homes, without sacrificing the future. For example, if instead of mandating 30% of new construction to be social housing, for each social housing unit incorporated in a private construction, a greater height density is allowed; it is a policy that thinks of itself as a platform for opportunities.

Some argue that the location and asset status of a home make it difficult to generate conditions for a price drop. You counter this by comparing it to a restaurant. What does this mean?

— Of course, land is limited, but horizontally. Maybe it's not as valuable for Barcelona, ​​but outside of it, we have density to explore. You can explore vertically, and also in mixed uses. People say, "What do I put here, a health center or housing?" Well, maybe both. I put a tower, I put the health center, and a park around it. And this is done in a way that's habitable. Vienna does it. Amsterdam does it.

Let's talk about land. Is there a problem with institutional incentives to develop it?

— Institutional incentives at all levels are misaligned because neither construction nor construction is facilitated. In 2007, we decided to change the land law and established that land must be declared as urban or developable. This may make sense, but at the same time, we initiated the central instrument for doing so, which is a general plan, as it would require many more reports and many more internal checks. Perhaps we should have been more careful, because in the subsequent phases, the partial plan and the license, there are also checks to be met. The public sector itself cannot fulfill the reporting obligations it imposes on plans.

Catalonia has a reduced ITP rate for those under 35, and has recently raised it for larger holders. What do you think?

— It makes sense to reduce it even further, but not by age, but rather for primary residences, provided that supply is made more flexible. But I would be more careful with the second part: we don't want high taxes on ownership, but on use. What I want is to promote housing for long-term living, whether by purchase or rental. I don't mind having large landlords who rent long-term. This shouldn't be penalized in the tax system.

Last week, Salvador Illa said he was considering limiting speculative purchases.

— If this translates into just buying to move in, no one will buy to rent long-term, and I don't know if this is an ideal situation, because the barrier to entry for buying is much higher. In the Netherlands, this measure changed the type of people who would live in those neighborhoods, and they were people who could afford it. So, I think it could be counterproductive.