In punchy remarks delivered at an event in Madrid, European Central Bank Vice-President Luis de Guindos has pointed the finger directly at Spanish rental policy for fuelling the country’s worsening housing shortage and surging rents, warning that the crisis is now a “bottleneck” threatening Spain’s economic performance.
Blunt critique of rental market regulation
“If you get rental policy wrong and even go so far as to restrict it, then you end up with a situation like the one we’re seeing now—insufficient rental housing and prices going up,” said de Guindos during his keynote speech.
Referring to Spain’s rental market as a structural inhibitor, the former Spanish Economy Minister said the current crisis stems from strong demand outpacing a curtailed, slowly expanding supply. He argued that this imbalance is suppressing the country’s long-term growth potential, which currently outpaces many European counterparts.
While not citing specific legislative acts or administrations, his comments come amid ongoing criticism of Spain’s housing policies, particularly rent caps introduced in some regions and a lack of new housing development to keep pace with demand.
A bottleneck with no bubble
This isn’t the first time de Guindos has raised red flags over housing constraints in Spain. In a February interview with RTVE, he had already described the real estate imbalance as “a bottleneck” for Spain’s economic sustainability. However, he quickly differentiated the current situation from the 2008 housing crash, highlighting that the financial system is now stable and devoid of a credit bubble.
“We don’t have a credit-driven housing boom. The banking system is in much better shape,” he reassured while doubling down on the need for better policy choices going forward.
