The word bubble Applied to housing, this creates fear. It reminds us of what we experienced seventeen years ago. Back then, the issue was financial, and the bubble of over-indebtedness burst, resulting in a demand that, in many cases, wasn't sufficiently solvent. Today, we can use the expression because we're not in that situation. As some experts claim, the current bubble It's about prices, meaning that the price per square meter is completely disconnected from income, wages, and economic growth. Its driving forces are demographic pressure, speculative investment, and the fall in credit prices.
A sample of everything These are the data on mortgagesBanks are granting them at full capacity, with the current focus on intermediaries seeking the best deals for individuals in a context of cheaper loans due to the drop in the price of money. And the data on defaults, at the levels of seventeen years ago, show that demand is, for now, solvent. Many buyers are driven by the FOMO syndrome (fear of missing out, in English), that is, the fear of missing out on the opportunity to own a home. As long as mortgages remain more affordable, prices will be difficult to fall. It's a fundamental economic principle: there is pressure from demand and insufficient supply, and therefore prices are rising. Prices are rising so much, in fact, that they can even negate the advantage of lower borrowing costs.
The dynamism of the buying and selling market has a downside. And that's rentals. Increasingly scarce and practically impossible to pay considering the country's average wages, renting is becoming increasingly complicated. The monthly asking price for a home eats up a large part of family income. And above all, it makes it impossible for the younger population to leave their parents' home. The limits established by housing law in the areas called stressed, which Catalonia was the first to begin implementing, have moderated prices, but at the same time contribute to reducing supply, which is already quite poor. And part of this supply, moreover, escapes into tourist or seasonal rentals, which again pushes prices upwards.
An essential element to halting the escalation is to increase supply to bring it closer to growing demand. And with a leading role for the public sector, either directly or in concert with the private sector, as both the Spanish and Catalan governments have begun to advocate. This applies both to the sale offer and, especially, to the rental offer. Many administrations have long left housing in the hands of the market, whose main objective is to obtain maximum returns. This demonstrates the need to facilitate its supply, and especially focus on affordable prices that are more in line with economic and social reality, which requires a certain public role. Only in this way will we, over time, stop talking about bubbles.
