This share prices have a 15 minute delay and are shown in the local time of the market in which the quote is displayed.
Unintended consequences of rental price control in Catalonia
EsadeEcPol Center for Economic Policy analyzes the impact of the rental price control policy approved in Catalonia in 2020. The study has been carried out by professors José García Montalvo, Joan Monras and José Mª Raya. They compared the evolution of prices in the housing affected by the regulation and in the surrounding non-affected housing. According to them, the problem of high rental prices is due more to a problem of supply and higher demand, than to market power, so the problem of housing affordability involves increasing the supply of rental housing, through public-private collaboration and offer greater incentives and legal certainty to owners who put their homes on the market.
Main takeaways from report:
- The price of expensive homes falls, but that of cheap ones rises: The analysis finds a downward effect on the aggregate rental price of 5%, concentrated in expensive homes, and in contrast a significant increase in cheaper homes that tended to stick to the “ceiling” marked by the reference index. According to the authors, the regulation would act in the opposite direction to that originally planned, harming households with lower income.
- Decrease in the rental offer of around 10%: Especially among the most expensive apartments. In the long run, this lower the offer as, in light of the evidence from other places where price controls have been applied for rent, it could:
- raise prices and move rental housing to sale, only accessible to higher-income households
- reduce future construction due to lack of incentives
- move demand to neighboring areas or cities (where prices do rise)
- lower the average quality of properties because the best ones are not put up for rent
- High degree of non-compliance, since the analysis finds numerous apartments for rent above the reference prices, consistent with the evidence in other cities of the creation of parallel black markets to circumvent the regulations.
- The solution to the problem of housing affordability involves increasing the supply of rental housing through measures such as: public-private collaboration, reserving a percentage of housing promotions for rental, tax incentives for owners who put their homes in the affordable rental market and improve legal certainty for owners.
Filter results
According to Kristalina Georgeva IMF Managing Director, lifting growth requires three things: one, regulatory housecleaning to unleash private enterprise; two, deeper regional integration; and three, preparedness to harness AI.
According to The European House – Ambrosetti, the European Union has an opportunity to boost competitiveness and growth by simplifying regulatory and supervisory frameworks, particularly in the areas of sustainability and the financial sector.
According to Ramón Casilda Béjar, Spain, in today’s complex geopolitical landscape, has the opportunity to strengthen its role as a bridge and connecting country between Ibero-America and the European Union, revitalizing investment flows in both directions.
According to @ECB, in moments of acute stress, the public often turns to physical currency as a reliable store of value and a resilient means of payment, underscoring the crucial role it plays above and beyond everyday transactional convenience
According to Juan S. Mora-Sanguinetti, in Spain a 10% increase in regulatory volume leads to a 0.5% drop in employment in companies with fewer than 10 employees.
According to Hélène Rey “In a world where stablecoins, particularly those pegged to the dollar, become an important global payment tool, we must brace ourselves for substantial consequences”.
@judith_arnal proposes reforms for the EU to advance regulatory simplification, starting with consensus on its meaning, with competitiveness as a pillar, plus coordination mechanisms and a governance rethink.
According to @iee_org, Spain has one of the most demanding tax environments for businesses within the European and international context, which may have significant implications for competitiveness, foreign investment attraction, and business expansion.
According to Christine Lagarde for the euro to gain in status, Europe must take decisive steps by completing the single market, reducing regulatory burdens and building a robust capital markets union.
According to the Bank of Spain, in a context of strong growth in transactions and prices, the conditions under which new mortgage loans are granted currently show no signs of easing in lending standards.
McKinsey notes that European private capital is half the size of the U.S. and must play a key role in boosting competitiveness, by driving innovation, scaling firms, and mobilizing the investment needed to close the gap with other regions.
IMF states that global financial stability risks have grown significantly, driven by tighter financial conditions and heightened trade and geopolitical uncertainty.