The housing fetishes

What makes the housing problem most intractable is that every effort is made to dissociate it from its main cause, which is none other than immigration.

In the last four years, Catalonia has gained 441,000 inhabitants (from 7.8 million to 8.23), which is equivalent to 110,250 per year, a figure that would require building a minimum of 31,500 homes each year just to accommodate the incoming population, without this pace allowing for any reduction in the deficit we are carrying. To eliminate it, it would need to be doubled for at least a decade.

It is evident that more housing needs to be built, but it should also be evident that any credible housing policy must begin by curbing demographic growth.

The psychological obstacles to reaching this conclusion are diverse. The first is fatalism, which tells many that the flow we receive is an inevitable consequence of the low Catalan birth rate and the high standard of living that we enjoy. There is no need to refer to the examples of Korea or Japan to dismantle this fatalism: it is enough to consult the migratory flows that the Basque Country and France are receiving, which in the same period have seen their population increase proportionally by a third and a quarter of the Catalan rate, respectively.

Since it is a matter of proposing solutions without facing the real problem, these are necessarily irrational. 

I have already referred to the construction of housing, a necessary but insufficient solution. Improving rail transport is also sensible, but unrealistic within timeframes that would prevent the seams of our society from bursting.

One of the favorite fetishes of the political class, and in particular of the left, is the law: writing on a piece of paper a formula that eliminates the effects of real scarcity. The two decrees that the PSOE government failed to pass were in line with this: it is not that they were harmless; they provided some palliative effect that redistributed income away from landlords and in favor of tenants, which, in the current circumstances, cannot be described as anything other than positive. However, their approval would not have meant the creation of any new housing (nor was that their intention) and, therefore, it left the scarcity exactly as it was.

Another fetish, in this case defended by the right, by some media economist and even by some clueless professor of economics, is the reduction of taxes that tax housing. Since the builder first and the buyer later bear various taxes (ITP, AJD, VAT or TP, for example), it is argued that their reduction would lead to a reduction in the cost of housing. All economists should know –at least since the publication of The Wealth of Nations, in 1776– that, in a situation of scarcity, real estate prices are (in the words of Adam Smith) “the maximum that the buyer can pay”, which implies that the reduction of taxes would translate into an equivalent increase in the price.

A third fetish is the transformation of private property housing into public housing. It is argued, for example, that if the social housing built during the Franco regime had not been privatized, the situation today would be better. It should be evident that the housing shortage would be exactly the same, and that exactly the same number of people who cannot find housing now would still be unable to find it, and that private owners would, therefore, have exactly the same bargaining power as they do now. It should also be evident that even in the hypothetical case that all housing were publicly owned, the deficit would still be exactly the same as it is now. The situation in Vienna is often cited as an example, where the public housing stock is very high, forgetting that the demographic growth of Austria is also just over a quarter of that of Catalonia.

Finally, let us consider the issue of legal certainty. It is evident that the nervousness of our legislators, the animosity of certain political forces towards real estate owners, the rejection of evictions, and the incredible tolerance towards illegal occupations do not create the appropriate climate for private capital—nor public capital, although that is never explicitly stated—to flow towards housing construction. One can imagine a more reasonable scenario in which, for example, if a vulnerable family cannot afford the rent, their protection is borne by society and not by a specific owner. However, it does not follow from this that the simple creation of a reasonable regulatory framework would solve a problem of enormous dimensions and which, as we have seen, grows much faster than our capacity to solve it by building.