In a recent podcast, economist Juan Ramón Rallo addressed the ongoing housing crisis in Spain, attributing it to political interests rather than purely economic factors. Rallo emphasized that the imbalance between housing supply and demand is a fundamental issue, stating, “There is a problem with housing because demand far exceeds supply.”
The economist pointed out that public administrations have exacerbated the situation by restricting construction. “On the supply side, politicians do not allow new developments,” he noted, highlighting how these artificial constraints lead to constant price increases. Rallo believes that relaxing urban regulations could alleviate these pressures, suggesting, “If there were more construction, housing prices would either drop or at least stabilize.”
However, Rallo argues that the explanation for the current state of the housing market extends beyond technical or economic considerations. He posits that political interests drive these policies, as many politicians” constituents perceive their property values as a significant part of their wealth. “Lowering housing prices attacks the assets and wealth of your voter base,” Rallo explained, indicating why politicians might be reluctant to implement measures that could lower property values.
Furthermore, Rallo pointed out that the existing situation also benefits tax revenue, as housing-related taxes contribute significantly to public finances, amounting to substantial annual income for the government. “This generates about €50 billion each year in taxes related directly or indirectly to housing,” he stated, underscoring the financial stakes involved.
Rallo criticized current policies for focusing on superficial assistance and price controls, which do not tackle the core issues. He argues that the only viable solution is to eliminate bureaucratic barriers and allow the housing market to function effectively. “The problem is not a lack of money; it is an abundance of restrictions,” he concluded, urging for a reevaluation of policies that limit housing supply.
