In a recent analysis, economist Juan Ramón Rallo has shed light on the underlying political motivations contributing to the persistent housing crisis in Spain. During a podcast discussion, Rallo explored the unrelenting rise in housing prices, emphasizing that the issue transcends mere economic factors and delves into political and social realms.
Rallo pointed out a fundamental imbalance in the housing market, stating, “There is a problem with housing because demand far exceeds supply.” He criticized public administrations for exacerbating the situation by obstructing construction efforts. “On the supply side, politicians do not allow construction,” he remarked, explaining that such artificial restrictions lead to a continuous increase in housing costs. He believes that if there were fewer regulatory hurdles, housing prices would either decrease or stabilize.
However, Rallo argues that the situation is not solely an economic issue. He identifies political interests as a significant factor, noting that for certain sectors, property values constitute a substantial part of their wealth. Any drop in housing prices would directly threaten their financial assets. Thus, he claims, politicians are reluctant to implement measures that could negatively impact their voter base: “Lowering housing prices attacks the wealth and assets of your voter base.”
Additionally, Rallo highlighted that the current situation also benefits tax revenue, as taxes related to housing generate considerable income for public coffers. He mentioned that these taxes amount to roughly 50 billion euros annually, directly or indirectly tied to housing.
Critically, Rallo pointed out that current policies focus on superficial financial assistance and price controls that fail to address the root of the problem. He argued that the real solution lies in dismantling barriers and enabling the market to function effectively: “The problem is not a lack of money; it is the excess of constraints.”
