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New figures confirm a dramatic collapse in the development of new and renovated homes in Barcelona city

new development for sale in Barcelona
In future big new developments in Barcelona like this one will have to dedicate 30% of units to social housing.

The pipeline of new home and renovation projects in Barcelona has dried up in response to a planning change intended to increase the supply of affordable new homes in the city.

Back in July I reported that new build and renovation planning applications in Barcelona province were down 63% in the first quarter, and argued that this was due to a collapse in Barcelona city, driven by a 30% social housing quota imposed by Mayoress Ada Colau on all projects above a certain size. New figures show this argument to be correct.

According to figures quoted in the Spanish press and attributed to Barcelona City Hall there were 64 requests for planning permission for residential projects bigger than 600m2 in the seven months since the quota was introduced in December 2018, compared to 234 requests the same period last year, a decline of 72% in the development activity of new or renovation housing projects in Barcelona city.

Of the 64 projects with more than 600m2, just 19 “might” comply with the quota, according to City Hall officials quoted by the Spanish daily El Pais.

If you assume ten units per project, that’s around 60 homes that “might” be offered as subsidised housing as a result of Colau’s quota. It’s a far cry from the 300 she claimed would be built every year. But the real question is how many new homes in Barcelona have not been started in the same period as a result of this policy? Any policy that reduces the supply of new and renovated homes in Barcelona will put upward pressure on housing costs, assuming demand remains the same or increases.

Just like many other attractive cities in the world today, Barcelona has an affordable housing crisis that calls for thoughtful solutions, though in Barcelona’s case the problem is so structural (high demand, shortage of land) I’m not sure if there is a solution, though taxing the hell out of second homes would be a start.

Ada Colau, Mayoress of Barcelona, warns of a speculative housing bubble in Barcelona
Ada Colau, Mayoress of Barcelona

But economically-illiterate and counter-productive measures like Colau’s social housing quota are the last thing the city needs. Despite her boasts of “changing the paradigm” and blazing a trail for other cities to follow all she has achieved is to restrict the supply of new and renovated homes for sale, putting upward pressure on housing costs for everyone but the lucky few who get to buy one of the subsidised new homes (and there’s plenty of corruption in that story too). I am confident this policy will never come anywhere close to achieving Colau’s claim of producing 300 or more affordable new homes each year, and will not stand the test of time.

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