Housing: scarcity and speculation

For many of the people who have an opinion on the housing crisis, the reason for it is speculation, that is to say, that landlords are raising prices.

There is no doubt that if the owners did not do it, prices would not rise. In this sense, the rent freeze (via automatic renewal of contracts) established by the second decree of the Sánchez government was a coherent response to this diagnosis.

So were some of the measures contained in the first decree and those announced by President Illa: the prohibition of evictions of vulnerable people, joint purchases between the Generalitat and a private individual, the public fund to buy homes, privileged loans for young people and, of course, price caps.

On the other hand, it is ridiculous to think that if a significant part of the housing stock were publicly owned, the prices of the rest would not rise: why wouldn't their owners raise them? In big football matches, the fact that clubs have distributed some tickets for free does not stop resale prices if demand is greater than supply. For the same reason, it is also ridiculous to think that if investment funds are excluded from the market, prices will improve. The reasoning underlying this measure is that private individuals who own two or three apartments are less greedy than large anonymous corporations, which is the same as saying that loan sharks strangle less than banks. The Maricarmen case shows that things do not work that way: if the market is willing to pay €2,650, neither the individuals managing their own money, nor the managers managing others', settle for less (unless under irresistible pressure, of course).

Ending speculation radically is relatively simple and perhaps legal (given the wording of Article 47 of the Constitution, which is very explicit). We can consider at least two alternatives: the first—applied in its day by the Franco regime—consists of freezing rents sine die; the second consists of the expropriation of all housing by a public institution, which would set an affordable rent for its occupancy.

The problem with this diagnosis—that the housing problem is speculation—is that it is superficial, which makes the measures derived from it insufficient. Suppose the Generalitat were to expropriate all the homes in the Barcelona metropolitan area that are not occupied by their owners. The problem it would face would not be the rent—it could set it at whatever it wanted—but the quantity: it would not have enough homes to meet demand, and, therefore, it would have to decide to whom to allocate one and to whom not to. Starting with the most vulnerable groups would be profoundly unjust, given that the middle class would be excluded, which is precisely the one that would have paid for the expropriation with its taxes.

Because the underlying problem is not speculation, but scarcity. Speculators only appear when there is scarcity; that is why there are no speculators in Huesca, nor were there any in Barcelona in the last decades of the 20th century.

And why now, suddenly, is there a shortage in all the great Western cities, Barcelona included? For two reasons. The first, because low cost flights and Airbnb have made urban tourism fashionable, once niche and now massive. The second, because new technology companies develop better in large cities than in medium-sized ones (where, in contrast, traditional manufacturing had its optimal habitat). Between one thing and the other, large cities have become filled with tourists, expatriates, foreign students, and immigrants (the latter, to serve the three previous groups and to care for an aging population), and the problem is that tourists, expatriates, students, and immigrants have to sleep somewhere. In our case, the two million inhabitants and the 100 million tourist overnight stays that Catalonia has gained this century have created the pressure that has led to speculation.

I am not against palliative measures to treat a patient (who could be?), but it is important not to confuse them with a cure. The measures that were intended to be approved would have helped some—vulnerable groups, tenants whose contracts are ending, some young people...—but they did not solve the problem of the lack of housing: the same number of people would still be unable to access it. This shortage can only be remedied in the short term by reducing demand and, in the long term, by building more.

Where to start? By reducing the number of tourists and our appeal as a migrant destination. Both are too high for our capacity.