Ada Colau, Mayoress of Barcelona
On the campaign trail for re-election this month, Barcelona Mayoress Ada Colau has promised she will force private developers to dedicate 50% of all new buildings to social or affordable housing, ignoring the fact that no developer will build any new homes under such conditions.
Back in December 2018 Colau introduced a social housing quota of 30% on all new developments in the city with a surface area of 600 sqm or more, including both new building and renovation. At the time she claimed this would result in more than 300 new affordable homes each year, with an average rental price of 510€/month for a flat of 80 sqm, or an average purchase price of €136,000.
Requests for planning permission are reported to have lept in the time leading up to the introduction of Colau’s social housing quota, as developers rushed to get projects approved before the quota made them economically unviable. However, I have not been able to find any data or information on how many projects have been started since the quota came into force. I suspect hardly any that comply with the quota.
With municipal elections around the corner on the 26th of May, and the polls not looking great for Colau and her hard-left Barcelona in Common party (Barcelona en Comú), she has returned to her favourite theme of affordable housing and railing against the “speculators” and “vulture funds” who invest in the city. This will please hard-left groups and housing activists like the Plataforma de Afectados por la Hipoteca (PAH) – a group that Colau used to lead, and whose interests she now looks after in City Hall.
Colau said that “every one out of two” new homes built in “the districts most under pressure from speculation and gentrification” will be destined to social housing. “We have seen that 30% is not enough. To defend life we must do more and raise it to 50% in the districts most under threat.”
Barcelona, too attractive for affordable housing
Barcelona is the kind of city where housing costs are only going to rise in the medium to long term: It’s an attractive, clean, safe city with a great climate and quality of life that will attract ever more residents and visitors in a globalised world. It is also a city hemmed in by hills and sea with an acute shortage of building land made worse by a dysfunctional planning system that restricts the supply of housing even further. The real problem is the lack of supply coupled with high demand, not the “speculators” that Colau imagines are hoarding properties in the city. Any funds that invest in building new homes in the city she considers to be “vulture funds.”
Barcelona needs policies to address the problem of affordable housing for people who live and work in the city, but a social housing quota of 50% would do nothing to solve the problem. It would only ensure the end of private new development in the city, making the supply situation worse.
Great article as always Mark. I don’t know if it’s just me getting older and having become a little wiser in the ways of our world or what… but it seems the quality of our politicians (on all sides), and as a result the quality of our democracies, have been on a serious decline for a while.
I don’t know if we should make IQ tests mandatory for our politicians involved in economic matters and ask them to have as a minimum a bachelor’s degree in economics and management experience in a private companies before taking on such roles but something definitely needs to be done.
There are only three ways to make housing more affordable: decrease demand, increase supply or a combination of the two. This initiative is certainly not going to change demand and as experience in every major metropolitan area has shown increasing regulations will scare investors and decrease supply. It’s not rocket science!
There are ways to decrease demand or increase supply finally being tried out in Toronto and Vancouver after initiatives such as Ms. Colau’s (with even much smaller percentages) failed miserably to make a dent in pricing affordability.
Those include, a foreign buyer’s tax (reduced demand), taxes on empty flats (increases supply), regulating and reducing tourist rentals (increases supply and the only measure currently being carried out in Barcelona) and on a federal level, tightening the rules for obtaining a mortgage which also reduces demand.
The latest measures being proposed in Canada are against funds from money laundering going into these RE markets which again decreases demand. The combination of these measures seem to be working as they have deflated both markets – still a long way from being affordable but nonetheless small steps in the right direction.
As you say it’s all about increasing supply or reducing demand, and as a hard-left activist who somehow managed to get into power Colau has no time for economic laws such as supply and demand that don’t support her world picture of speculators, vulture funds, and victims / oppressors. Barcelona is going downhill under her management in terms of cleanliness, maintenance, transport and security, whilst she’s busy virtue signaling and pursuing the latest progressive cause, so I guess it’s possible that, given enough time in the job, she’ll reduce demand for Barcelona by ruining it, rather like Chavez & Maduro reduce demand for Venezuela. But otherwise I have no reason to think she will do anything actually in her power, like sorting out the planning system, to address the problem of housing affordability in Barcelona. The planning system is the best tool at her disposal but everyone in the business knows the planning department has become even more dysfunctional under her. It’s riskier, more expensive and time consuming than ever to renovate a property or do a new development in Barcelona under Colau.