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Instituto Valenciano de Investigaciones Económicas

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García-Montalvo: “We should measure the results of public housing policy, not the intentions”

El investigador afirma en una conferencia de IvieLAB que no hay datos que avalen que el aumento de los apartamentos turísticos haya provocado un incremento de los precios de los alquileres

Rental prices in the Valencian Community rose an average of 0.5% during 2017, just one-tenth above the national average, according to data provided by the Spanish National Statistics Institute (INE). Meanwhile, house prices in the region grew 2.7% (3.2% for new homes and 2.6% for second-hand properties), compared to 6.2% for Spain as a whole, again according to INE. These figures contrast with those offered by other platforms such as Idealista, which on its website reports an increase of around 7% in rental prices in the Valencia region in 2017.

In his lecture on “Public housing policy: what works, what doesn’t and what we don’t know”, the Ivie researcher and professor of Economics at Universitat Pompeu Fabra, José García-Montalvo, highlighted the lack of data and the misinformation surrounding the housing sector and government policies aimed at providing access to housing. In his opinion, for instance, “there are no data to back the claim that the growth of tourist apartments in cities such as Barcelona and Valencia has pushed up home rental prices”.

In his lecture, which was held as part of the program of activities of the Ivie’s IvieLAB (Laboratory for the Analysis and Evaluation of Public Policy) project, Professor Montalvo called for public housing policy to be judged on its actual results, not its intended results, with a view to establishing objective criteria that will help make appropriate decisions. “Analyzing a program’s collateral and long-term effects is just as important as knowing whether it will be effective,” he said.

The main goal of housing policy is to provide access to housing for the most disadvantaged and low-income groups, whether through home purchase or rental. Many different policies can be adopted to achieve that goal, but “the question is, when to apply each policy, which are the most effective and which have the least collateral effects.”

In Montalvo’s opinion, there has been too much emphasis on home purchase and it would be better to stimulate home rental, as occurs in other developed economies, where rental housing accounts for between 30% and 50% of all available housing, compared to 16% in Spain.
In the conference, the Ivie researcher listed some of the measures he believes would improve access to decent housing in Spain:

  • Homes built with public subsidies should retain their status as subsidized housing indefinitely and all new state-subsidized housing should be for social rent
  • Tax benefits for home buyers should be completely abolished
  • Banks should not be allowed to have an ownership interest in appraisal companies
  • The banking industry should be supervised so as to prevent irresponsible mortgage lending (risk control)
  • The supply of new housing should be increased through controlled land development regulations that still provide developers with the necessary legal certainty

José García-Montalvo’s lecture is part of the series of conferences and seminars titled “Evaluation of the sustainability of welfare policies in the 21st century”, organized by IvieLAB, the Ivie’s Public Policy Evaluation Laboratory.

29 November 2018

GALLERY