The decline in young homeowners: the number of young homeowners has halved in a decade.

The percentage of young people who own their own home has fallen from 69.3% to 36.1%, increasing wealth inequality, warns the Bank of Spain.

The Bank of Spain, in its annual report for 2022, provides data that clearly describes the worst reality of young people's access to housing. According to the document, in ten years, the percentage of young people under 35 years of age who own a home has fallen from 69.3% to 36.1% due to the increasing difficulty of access to buying a home, which leads to an increase in the number of people living in rented apartments, and this affects not only young people, but also low-income households and some regions.

The shift to renting, according to the Bank of Spain, is deeply linked to poor conditions''in the labor market. Furthermore, the organization states that it has led to an increase in wealth inequality in our country. The regulator claims that there is evidence that a high percentage of home ownership contributes to reducing wealth inequality. However, it warns that the sharp decline in the percentage of households owning a home seen in Spain since 2014 (from 80.4% to 73.9%) has led to an increase in inequality.

Rent prices are also not making things easier for young people as well as older adults.

The high rents that have to be paid relative to income lead to an increase in the number of people experiencing social exclusion and households with limited ability to spend on other goods and''services, warns Bank of Spain.

The report claims that in 2021, 48.9% of Spanish households living in rented housing were in poverty or social exclusion, the highest in the EU, while 40.9% allocated more than 40% of disposable income to housing, compared to an EU average of 21.2%, especially for low-income households.

Experts recommend that this percentage should never exceed 30 or 35%.

When it comes to why rental prices have skyrocketed since 2014

Bank of Spain points to insufficient supply growth to meet strong demand growth.

The Bank of Spain says that the available official statistics, which provide''various rental price metrics for rented housing, shows a significant increase in average rents per square meter - up 20% on an accumulated basis from 2015 to 2021 (up 12% in real terms).

The bank explains that this mainly reflects "higher marginal prices for new homes coming to market and contract renewals, compared to a more moderate rate of renewals of current contracts that evolve in line with the Consumer Rental Price Index through 2021".

Along with the limited supply of homes for rent, the reason for price rises is also due to 'a limited increase in the public supply of social housing and the emergence of alternative forms of renting for periods of less than a year''in markets with a high demand for housing', as the Bank of Spain analysis points out.

The regulator explains that the previous strategy based on public housing and the lack of funding for public rental housing from the State and Autonomous Communities explain the low amount of public rental housing, which is estimated by the Ministry of Transport, Mobility and Civic and Urban Planning (Mitma) at around 290,000 dwellings, where 1.6% of households live.

These figures contrast, as the Bank of Spain notes, with public rental housing in other European economies, where their share of the total housing stock 'stock' is 7.5% on average in the EU, and also reaches significant values, for example in France''medium term'.

Bank of Spain reminds that "the economic literature indicates that if price controls have the ability to reduce rental prices in the short term in regulated areas, this policy may have a negative impact on rental supply and segmentation of the real estate market." In particular, the regulator warns of "a decrease in the quantity and quality of affordable housing on the market, a change in the supply structure and an increase in prices in unregulated segments, especially when controls are maintained for a long period of time." In the Spanish context, the data provided on the recent experience in Catalonia, according to the Bank of Spain, indicate a 'decline in average rental rates in the short term and''some changes in the supply structure, although the evaluation of this policy makes it difficult to apply it in a pandemic'.

Besides public policies, the Bank of Spain advocates cooperation with the private sector to stimulate the supply of rental housing.

Besides policies to increase the supply of rental housing, the Bank of Spain proposes to consider 'tax and regulatory measures to''increasing the supply of rental housing by professional private individuals'. Specifically, he suggests the introduction of tax incentives for corporate entities to maintain a certain amount of rental housing at reduced prices, as well as flexibility in municipal regulations in stressed areas that restrict the use of land and property for residential purposes.