Possible solutions to the housing crisis

As a result of Sectoral territorial plan for housing From the Catalan Government and with the aim of reflecting on the relationship between the economy and the housing crisis in our country, ARA, in collaboration with the Government of Catalonia, has organized a series of debates on housing. On December 19th, journalist Laura López moderated the last panel, entitled Housing and EconomyWith Agustí Sala, a journalist specializing in economics and deputy director of ARA, and Fernando Trias de Bes, an economist who has contributed to the newspaper for over 15 years.

The current crisis situation

Several factors explain how the current housing crisis has arisen: from high prices and a lack of supply to tourism and speculation, among others. "There is much more demand—both for buying and renting—than supply. This situation is the result of what has been done for years: leaving supply in the hands of the market, especially the private sector seeking profits, which has caused prices to skyrocket," explained Agustí Sala. Attempts are being made to regulate prices, but in economics, prices are a symptom; therefore, if the focus is only on the symptom, such as price caps, and the root of the problem is not addressed, there will be no change. "Changes may be seen in the short term. When a measure like a price cap is implemented, the supply of residential housing tends to decrease; however, tourist or seasonal apartments do not decrease, therefore, the measure is not working," Sala pointed out. Trias de Bes understands that the price cap is a punitive measure and that incentive measures should be found: "The public sector could guarantee that tenants are reliable; there should be insurance policies that cover landlords or equitable coverage for both parties." Both considered that instead of penalizing by limiting prices, better results would be obtained by providing incentives: "Public authorities should guarantee the right to housing, act as a neutral arbiter guaranteeing the rights of both parties and ensuring that there are no imbalances between landlords and tenants."

Long-term planning

The housing crisis is not a recent problem, nor will it be solved quickly: "If there is good public management, it will take at least ten years to fix it. And we cannot forget that long-term public management is incompatible with political alternation; that is why state agreements are needed to guarantee long-term planning," Tri commented. The reality is that we have a market where there is increasingly less rental supply, and everything ends up in the sales market, especially the resale market, and for many years the government has only been stimulating purchases. Experts agreed that long-term planning is essential. "When you try to solve a problem with short-term measures, you are just putting on band-aids, not solving the problem," the journalist said.

Models that work

In Vienna, one in four homes is social or public housing, whereas here it only represents 2%. To achieve the Viennese model, which is a true benchmark, the administration has dedicated itself for 100 years to owning a significant portion of the housing stock, and they have done so without creating ghettos, promoting coexistence among people of different income levels in the same building. According to Trias de Bes, in Catalonia, achieving a similar situation would require many years, and in the meantime, short-term measures—such as tax incentives for investment to make housing construction profitable—would have to be implemented, combined with long-term planning, which he believes is what the Catalan government is doing. Along the same lines, Sala comments that if the proportion of public housing were sufficiently large, between 10% and 20%, it would have an impact on the overall situation, but the current 2% is negligible and has no effect; prices continue to skyrocket, and so does the market.

Necessary Solutions

The speakers asserted that the housing problem is multidimensional and multifaceted: promoting rehabilitation will not solve the problem, nor will creating 50,000 new homes by 2030, nor will legislating to further protect landlords. They believe that social aspects should take precedence over politics, and housing is one of them, because otherwise, legal uncertainty arises. "Government agreements are essential regardless of ideology; housing is a social issue," stated Trias de Bes. "We must commit to a government plan to resolve the housing problem within ten years," he said.

City models that work have a significant public safety net, with rules that encourage private investment or landlords to favor rentals. The state plays an important role as a regulator. They believe that at this time there is a sense of overprotection of the tenant and lack of protection of the landlord, and that the government and public administrations should be impartial. Sala proposed combining short-term and long-term measures, and Trias de Bes added that the solution should be a mixed public-private partnership. The public sector must act as a good arbiter to ensure the private market functions properly.