"The deterioration of access to housing in Spain is due to speculation."

The increase in housing prices in Spain is linked to a sustained rise in prices, driven more by wholesale demand, which is usually speculative, than by retail demand for housing. This is one of the main conclusions presented in the latest issue of "Cuadernos de Información Económica" from Funcas, which states that the contrast between real estate sales transactions and mortgage agreements, where only four out of every ten housing sales are made using a mortgage, means that a large portion of properties are purchased as investments, which "further drives up prices and makes access more difficult."

Furthermore, the authors of the study, Santiago Carbo and Francisco Rodriguez, point out that the shortage of land plots and the rising demand for housing are other reasons that increase the difficulty of accessing housing, along with inadequate long-term land policy and growing demand. This dynamic has worsened housing availability, especially after the financial crisis and the pandemic, when prices quickly rebounded, outpacing wage growth, according to the authors of the study. Thus, factors such as "inadequate" long-term land policy and rising demand have exacerbated the problem, increasing inequality between homeowners and those who cannot afford to buy a home. "The deterioration of housing availability exacerbates inequality, as it benefits homeowners and harms renters and families who cannot afford to buy a house," they note.

Support for property

According to the authors of the study, the solution lies in having those responsible for housing policy rethink support for ownership in favor of guaranteed inclusion in high-quality affordable housing, which includes supporting an effective rental market—while avoiding interventions that further drive up prices—and increasing the supply of housing, including a broader public housing stock in many cases. In this context, they warn that the responses to mortgage affordability issues often involve credit subsidies and restructuring mortgage contracts, strategies that "have not always yielded the expected results." "Often, government support measures do not effectively mitigate falling housing price cycles and, in some cases, have contributed to the continuation of bubbles," they warn.

Increase in housing prices: wealth accumulation

In their own way, authors Marina Asensio, Marina García, and Daniel Manzano also note that the increase in asset values, such as housing, allows for the accumulation of wealth beyond net acquired property, which is "regularly" converted into savings accumulation.

More problems for young farms

In this regard, the authors also note that young households have reduced their share of home ownership to 35%, which is half of what it was a hundred years ago (70%). Thus, they claim that this shift towards a new "lifestyle" based on renting also faces the absence of a "truly deep" rental housing market that would alleviate strong upward pressures on its prices. However, they point out that Spanish households still prefer home ownership, despite the fact that the number of households with rented housing has doubled from 10% to 20%.