Europa Press The Other Side of Housing Regulation: The Black Market Expands
If the shortage of supply and regulatory pressure come together, the result is the informal economy
It has already been said many times: the real estate problem is a problem of lack of supply. However, this lack of supply is linked to an excess of demand. This excess of demand, ultimately, is linked to demographic growth and population concentration.
This is the underlying reason why real estate regulation doesn't work and, more importantly, can't work. The reason is as simple as the law can't prevent people from demanding housing. However, as in economics, everything can always get a little worse, the combination of regulation and excess demand has a well-known outcome for economists: the black market.
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First of all, the first thing to understand is that a black market doesn't have to be necessarily a pure black market. What is known as "informal economy" can occur. That is, all kinds of processes that should be regulated and are not.
In the case of the real estate market, this is what we are beginning to see. As shown in a recent report by Telecinco, an industry of fake documentation (payrolls, bank statements, employment contracts, etc.) is already starting to flourish. This is the documentation that allows landlords to screen among housing applicants:
As the images show, for the forger, it's as simple as copying an existing payroll and changing the data. For this service, the forger admits to charging ninety euros. Faced with the forged payroll, a real estate agent consulted by Telecinco explains that, at first glance, they can't tell if it's fake or real.
This is a very clear dynamic of informal economy in contexts of constant demand and scarce supply. In fact, it can be stated that there is no reason for this situation to stop in the medium-short term. On the contrary, it is most likely to lead to a spiral of informal economy and legal regulation that follows it.
For now, what is certain is that Barcelona has the most expensive rent in Spain. Additionally, it also has the most expensive room rent in Spain, with an average of 661 euros.
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