Spain and Portugal show us a few things about taking on the cost of housing

Public housing in Spain

Contributed by Joe Montero

Like Australia and many other countries, Spain is experiencing a surge in homelessness, and the cost of housing is forcing many younger citizens to remain in the home of their parents. Only 16 percent of young people live independently. The average for Europe is 32 percent.

The government there is not ignoring the problem. A decision has just been made to make 50,000 foreclosed homes held by Serab, a mostly government owned bank, available for affordable rent. A further 15,000 homes will be added to social housing. And there is an intention to pass a bill through the parliament to introduce rent caps of 3 percent per year, in areas where rents are rising significantly. These rises were sometimes more than 20 percent last year.

Photo by J. M. Cadenas: The Madrid headquarters of the Banko de Espana, the national central bank and majority owner of Serab

Serab was created in 2012 to take over 50 billion Euros worth of real estate resulting from the housing market crash of 2009.

Economy Minister Nadia Calvino said the government was trying to increase the supply of public housing which at 300,000 homes is just 3 per cent of total housing, The aim is to boost the 209,000 public homes by 17 percent.

Industry organisations are attacking these reforms and accuse the government of playing to win votes at the coming regional elections.

There is still a long way to go to resolve the housing situation. But at least the Spanish government has taken some important steps, and the pressure coming from society is to do much more.

Transport for trains, buses, and trams, have already been cut by 30 percent. country trains fares are to be cut. There has been a crackdown on heating and air conditioner costs by placing limits on what energy suppliers can charge. Tax on this has been reduced. A financial package, including a 17.5 rise in pensions has ben provided.

Prime minister Pedro Sanchez said: “Housing in Spain is a constitutional right, but not a real right. Young people have to wait an unacceptably long time to access housing and become independent. He was referring to the need to align the reality to the constitution.

Photo by Pierre-Philippe Marcou/AFP: Spanish prime minister Pedro Sanchez

Portugal is moving in a similar direction. This country’s housing minister, Marina Conclaves, said, “the answers in the market are not sufficient.”  

Last year her government approved 2.4 billion Euros for new public housing. By the end of 2026. Last week a bill through its parliament gave the government the power to turn vacant properties into social housing, although rent payments will still go to the landlords.

Tax on food has been abolished. There are new subsidies for poorer households. Landlords are only allowed to increase rent by up to 2 percent.

Photo by Antonio Cotrim/Lusa: Portugal’s housing Minister Marina Concalves

For both countries this is a shift away from the orthodoxy of market driven housing policy, and once this shift has been made, it opens the door for further shifts. This is what is necessary to take on the cost of living crisis, especially the unaffordability of housing component.

Australia keeps on moving in the opposite direction. True, there has been a little talk about social housing and promises from the federal and state governments. Labor committed $10 billion, which looks good on paper. The reality is that most of this is committed to the pockets of developers. This is better than what the Morrison government offered, but still not enough to make a big difference.

The flaw is that the commitment is based on helping the market find market solutions. Australia’s youth will still be stuck with their parents and the problem of homelessness will get worse.

We don’t even have the right to housing as a constitutional right. This is how far behind Australia is.

So long as the Australian government refuses to accept anything other than minimal government intervention, the gap between the need and what is delivered will continue to widen.

The Spanish and Portuguese governments aren’t entirely free from this and are themselves playing catchup on decades of neglect. At least they are starting to move outside the box, and Australia has a lot to learn from their example.

Conditions might be a little different here. This doesn’t take away the need for much more public and social housing. There is no reason why there shouldn’t be a ceiling on rents. Why shouldn’t the government provide more housing to cover for the failure of the market to provide what is needed?

Be the first to comment on "Spain and Portugal show us a few things about taking on the cost of housing"

Leave a comment

Your email address will not be published.


This site uses Akismet to reduce spam. Learn how your comment data is processed.