Reality Check: Rent Prices Rise Again With Catalonia at the Peak

Catalonia approved an ambitious urgent measures decree law last week to address the housing problem. The decree bears the stamp of the Comuns and the CUP, and has been applauded by housing unions. PSC thus assumes the left's narrative, which focuses on real estate speculation and offers regulation as a solution.

The decree law advances the left's regulatory obsession by including seasonal rentals and room rentals in the price cap. It also tightens the noose on owners and large holders. It expands the register of large holders and contemplates the creation of a body of inspectors with sanctioning capacity.

This Monday, the 9.6% increase in rental prices in the first quarter of the year in Spain was announced. These are data from Fotocasa's latest price report. Renting is more expensive than a year ago in all autonomous communities, and Catalonia continues to lead the ranking along with Madrid.

Rent Continues to Climb Despite Regulation

Six autonomous communities (Canary Islands, Extremadura, Galicia, Murcia, Valencia, and Castilla y León) have surpassed their historical maximum. The highest price per square meter remains in Madrid (20.86%), followed by Catalonia (18.29%). If we look at the cities, Barcelona remains the most expensive in the entire State for renting.

The data show that we are facing a structural problem, and that the left's solutions in Catalonia and Barcelona have not worked. A reality check that is caused by the increase in demand to historical highs and the collapse of supply to structural lows. This causes a growing market tension that has led to the greatest increase in rent in recent history.

The problem is not limited to Catalonia, but affects all Spanish communities without exception. But it has been shown that regulation not only doesn't work, but worsens the problem because it further contracts supply. Barcelona, where the Comuns have governed for eight years, is the best example of the failure of their solutions.

Endemic Crisis

The current housing problem is that regulation will not solve the problem of demand saturation and supply scarcity. What seasonal renting showed is that the market always tends to flee from regulation, not out of greed but for profitability. And this is what will very likely happen with the new decree from the Govern.

Population concentration in cities makes it unlikely that demand will fall in the short and medium term. In fact, it is most likely to continue rising. Even if supply were to recover, it is impossible for it to do so at levels sufficient to meet demand.

If demand continues to grow and supply remains insufficient, regulation will only push the market to the margins of legality. Catalonia is condemned to an endemic housing crisis against which regulation, rather than the solution, will be another problem. This will only fuel the housing conflict that provides no solution, but which some parties are using to resurface.