The Unlikely Challenge to the Spanish Housing Market
Image courtesy of Jorge Fernández Salas via Unsplash
When Airbnb was originally founded in 2008, few could have imagined the devastating effects that it would have had on housing markets worldwide. The initial concept of the startup revolved around creating a platform in which people could rent out their spare beds, rooms, or even houses to tourists and travelers. Founded in San Francisco, the company was quick to expand first across the United States and then around the world, with listings on their website usually offering higher quality at a lower price point.
Today, the company is worth well over $70 billion, boasting a network of around 150 million users worldwide that have cumulatively booked 1 billion stays in the last year alone. Still, convenience always comes at a price. Recent reports have suggested that the presence of Airbnb in many popular tourist destinations has driven up housing prices, thus making it more difficult for locals to afford homes. Particularly in Spain, home to one of the smallest rental housing markets in Europe, locals are regularly forced to compete with tourists to secure housing.
Granted, Airbnb alone cannot single-handedly be held responsible for the housing crisis faced by Spain and many other countries. The Spanish rental market is particularly stressed because of a prolonged effort of the Spanish government to incentivize homeownership, culminating in an estimated 75% of households owning a home in 2022. With such few houses available for rent already, it is easy to see why the market would struggle even more when further burdened by Airbnb’s business model, as many critics argue that it incentivizes property owners to purchase more homes for the sole intention of renting them out through Airbnb and removing them from the housing supply available to locals.
Finally, Private Equity Firms like Blackstone have investments in around 30,000 homes across Spain, with the company regularly increasing housing rental prices to receive a higher return on investments. As reported by the Borgen Project, “the significant returns for Blackstone due to the increased rent prices are costing individuals more than 30% of their income.” When considering that the vast majority of renters in Spain are adults 18-34 who already struggle with a 35% youth unemployment rate and record low salaries, it becomes easier to understand all of the factors that contribute to such a struggling rental market.
Although there is no single solution to the whole ordeal, the Spanish government has already taken steps to disincentivize practices encouraged by businesses like Airbnb through the “Ley Por el Derecho a Vivienda.” The right to housing law signals a shift in the Spanish government’s housing policies, as it now aims to prioritize rental markets over homeownership. Through the bill, the Spanish government formally allows regional governments to “impose rent caps for apartments owned by landlords in areas deemed to be stressed markets.” Such a requirement means that in cities like Madrid and Barcelona, where high demand and low supply have led to rents spiking by an estimated 60%, locals should no longer be priced out of their own homes. Additionally, municipal governments now have the authority to fine landlords that own ten or more units whenever said units remain unrented for long periods of time. Considering that roughly a third of Spain’s Airbnb ‘landlords’ own 5 or more homes, the bill is expected to drastically slow down short-term rentals and redirect tourists to more sustainable accommodations for the Spanish economy.
In recent years, Spain’s government has consistently attempted to enact more experimental policies to protect the lower classes and diversify its economy. While it is still too early to tell, the hypothetical success of the Right to Housing Law could lead other countries with stressed housing markets like England, France, or the Netherlands to follow suit and allow local populations to regain control of their cities.
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