Two researchers from the Autonomous University of Barcelona (UAB) have investigated the effects of the economic recession on housing. Their results show that the impact of the economic downturn and the corresponding effect on the population pyramid (caused by an ageing population and low immigration), have led to a radical decline in the demand and a drastic change in the Spanish residential system.
“While between 2004 and 2007 our estimates say that one in every ten new homes built was for rent, nowadays new homes that are built to sell are below one. Phrased otherwise, the number of new homes created is the same as the number of houses that start to be rented out so the net creation of homes is actually for rent”, explained Juan Antonio Módenes, researcher at UAB and co-author of the study, to SINC.
The scientists have used data from the Spanish National Office of Statistics (INE), the Organisation for Economic Cooperation and Development, Eurostat and the Spanish Survey of Household Finances by the Bank of Spain. In total, they have calculated that the residential demand of the population (the annual increase in the number of homes) has decreased below 20% of the maximum figure reached in 2005 and 2006.
Renting has recovered significantly due mainly to globalisation and people moving elsewhere. “The change in the renting trend is due to young people’s lack of solvency in the current climate. If the inclination towards renting becomes more common, we will be witness to younger generations who rent more in succession to older generations who own their property”, the researcher points out.
During the property boom years new-builds increased exponentially, as did improvements to houses already standing. In the same way, immigrants and young people were those who had access to both buying and renting second-hand homes. “This huge availability of housing for rent is noticeable in the current recession and period of low relative demand”, adds Módenes.
Advantages of the new system
For the researchers, a change to the residential model based on rent could have many advantages, such as the growth of independent construction and generation of wealth in the short term in developing, constructing, selling and mortgages.
“For the younger generation to leave home, even encouraging them to do so earlier, can only be done with an extensive offer of rental properties. As well as making the life transition easier for Spaniards, it would encourage economic growth through sustaining the internal demand”, the researcher has highlighted. “We believe that the social and demographic potential is there”, adds Módenes, “you just have to make the most of it”.
There are also social and family advantages: greater freedom in organising the life cycle of young people and their parents. Lastly, the new scenario would offer an easier and more stable way of leaving home, which would bring forward the priorities of families and their reproductive plans, with the consequent advance (even an increase) in fertility.
Everything depends on the policies applied
The researchers have designed two kinds of scenarios for the development of Spanish society according to the current residential trends (which will depend on the policies implemented).
The researchers insist that the changes indicated will occur in the medium to long term
On the one hand, it could be a change for the worse. “If the economic growth is low, creation of employment weak and labour conditions precarious for young people, access to housing will continue being mainly through ownership, but with restricted mortgages and difficulties to mobilise family networks as guarantors”, they state.
The other scenario, replacement of the residential system, is more positive. “It would consolidate renting as a step prior to home ownership, something very common in other countries”.
This scenario would also be reinforced if an active housing policy were in place that would increase the incentives to rent and the construction sector was focused on the renovation of old properties, which would be the main way for young people to access housing.
“We are currently in a situation that resembles the first scenario. To change to the second one, it is necessary to commit to incentivising the creation of housing for young people, one of the main driving forces for the economy”, argues Módenes.
The researchers insist that the changes indicated will occur in the medium to long term. “These are processes that imply generational changes”, they conclude.