Asociacion Hipotecaria Espanola (2007), “Estadisticas del Mercado Hipotecario, Ano 2007”, http://www.ahe.es, accessed on October 28, 2008.
Ayuso and Restoy (2003), “House Prices and Rents: An Equilibrium Asset Pricing Approach”, Bank of Spain Working Paper, number 0304, Madrid, Spain.
Ayuso and Restoy (2003), “House Prices and Rents in Spain: Does the Discount Factor matter?”, Bank of Spain Working Paper, number 0609, Madrid, Spain.
Bover, O. and J.F. Jimeno (2007), “House Prices and Employment Reallocation: International Experience”, Bank of Spain Working Paper, number 0705, Madrid, Spain.
Brueckner, J. K., (2007), “Government Land-Use Interventions: An Economic Analysis,” 4th Urban Research Symposium, World Bank, Washington, D.C.
Callau, J.B. and R.D. Pac (2008), “Sobre el peso del sector de la construccion en la economia espanola”, Boletin Economico de Informacion Comercial Espanola, 2944, 21–31 de Julio de 2008, pp. 31–45.
Credito-Vivienda.com (2008), “SIMA 2008 - El mercado español de segunda vivienda”, http://www.credito-vivienda.com/sima-2008-el-mercado-espanol-de-segunda-vivienda.html, accessed November 10, 2008.
De los Llanos, M. (2006), “Las Medidas de la Politica de Vivienda en Materia de Alquiler y Vivienda Protegida”, Boletin Economico, Bank of Spain, Madrid, Julio/Agosto 2006.
DiPasquale, D. and Wheaton, W. (1994) “Housing Market Dynamics and the Future of Housing Prices”, Journal of Urban Economics, 35(1), pp. 1–27.
Dominguez Martinez, J.M. (2004), “Fiscalidad y coste de endeudamiento de la inversion en vivienda en Espana”, Cuadernos de Informacion Economica” No. 180, May-June 2004, Fundacion de las Cajas de Ahorros Confederadas, Madrid, Spain.
Eicher, T. (2008), “House Prices and Land Use Regulations: A Study of 250 major U.S. cities”, Northwest Journal of Business and Economics, forthcoming.
El Mundo (2008), “Bancos y cajas encarecen las nuevas hipotecas”, El Mundo November 6, 2008, http://www.elmundo.es/mundodinero/2008/11/06/economia/1225961479.html, accessed November 19, 2008.
Expansion (2008), “Corredor: El ‘stock’ de viviendas debe absorberse antes de dos anos”, published October 25, 2008, http://www.expansion.com, accessed October 25, 2008.
Garcia-Montalvo, J. (2007), “Algunas consideraciones sobre el problema de la vivienda en Espana”, Papeles de Economia Espanola, forthcoming.
Garcia-Vaquero, V. and J. Martinez (2005), “Fiscalidad de la Vivienda en Espana”, Bank of Spain Working Paper No. 0506, Madrid, Spain.
Gimeno, R. and C. Martinez-Carrascal (2006), “The Interaction between House Prices and Loans for House Purchase. The Spanish Case”, Bank of Spain Working Paper, number 0605, Madrid, Spain.
Girouard, N., Kennedy, M., van den Noord, P. and C. Andre (2006), “Recent House Price Developments: The Role of Fundamentals”, OECD Economics Department Working Paper, No. 475.
Glaeser, Edward L. and Gyourko, Joseph (2008), “The Case against Housing Price Supports,” The Economists’ Voice, Vol. 5, Iss. 6, Article 3. http://www.bepress.com/ev/vol5/iss6/art3
Glaeser, E. L., J. Gyourko and R. Saks, (2005). “Why Is Manhattan So Expensive? Regulation and the Rise in Housing Prices,” Journal of Law and Economics 48, (2), pp. 331–69.
Hilbers, P., Hoffmaister, A., Banerji, A. and H. Shi, (2008). “House Price Developments in Europe: A Comparison”, IMF Working Paper, Washington, DC.
Klyuev, V. (2008), “What Goes Up Must Come Down? House Price Dynamics in the United States”, IMF Working Paper, number 08/187, Washington, DC.
Lopez Garcia, M. A. (2003), “Politicas de vivienda: eficiencia y equidad”, Sector Publico y Eficiencia”, Papeles de Economia Espanola, No. 95, April 2003, Fundacion de las Cajas de Ahorros, Madrid, Spain.
Martinez Pages, J. and L. Angel Maza (2003), “Analisis del Precio de Vivienda en Espana”, Bank of Spain Working Paper, number 0307, Madrid, Spain.
Martinez Pages, J. and M. de los Llanos Matea Rosa (2003), “Precios de la vivienda en Espana: evolucion y factores explicativos”, Perspectivas del Sistema Financiero, 78, Fundacion de las Cajas de Ahorros, Madrid, September 2003.
Pellicer, L. (2008), “Caixa Catalunya arrienda casas impagadas a sus antiguos proprietarios”, El Pais, October 27, 2008, Madrid, Spain.
Tinsa (2008b), “Notas de Coyuntura Inmobiliaria – Mercado Residencial, Tercero Trimestre 2008”, www.tinsa.es, accessed October 17, 2008.
Tribunal de la Defensa de la Competencia (1993), “Remedios politicos que pueden favorecer la libre competencia en los servicios y atajar el dano causado por los monopolios”, Madrid.
Van den Noord, P. (2005), “Tax Incentives and House Price Volatility in the Euro Area: Theory and Evidence”, Economie Internationale, CEPII Research Center, issue 1Q, pp. 29–45.
Prepared by Christian Henn.
According to the 2001 census, 58 percent of properties were constructed before 1980.
Ayuso and Restoy (2003) judge that house price increases in the second half of the 1990s mainly constituted a correction of previous undershooting.
In particular, planning of electricity and water infrastructure is complex and lengthy at 7-10 years (OECD, 2007).
From 2007 on legislative changes obligated municipalities to use this percentage of land exclusively for utility provision.
Tribunal de Defensa de la Competencia (1993, p. 149 and 1995, p. 37).
Landlords are obligated to renew leases annually during the first five years. Rent payments are adjusted by the CPI.
Income tax relief is available for both principal and interest payments as well as other items such as taxes, and other permit and licensing costs. The general deduction rate is 15 percent and up to around 9000 euros may be applied to the deduction annually. The deduction also applies for deposits into dedicated savings accounts for home purchase. See e.g., OECD (2007).
Indebtedness also became more widespread. As of 2006, more than 40 percent of persons had pending debt in Spain, compared to just 10 percent in 1990 (Bank of Spain, 2006).
Nieto (2007) identifies higher household wealth—largely due to higher house prices—to be the single most important determinant of credit expansion to households in Spain. There has thus been a strong reverse causality through collateral effects facilitating twin booms in credit and housing prices; this financial accelerator effect is now expected to reverse and exacerbate the downwards adjustment. Gimeno and Martinez-Carrascal (2006) also find that the housing and credit booms in Spain were strongly interrelated. In a VAR model, they estimate that a one percent increase in credit growth is associated with a 0.15 percent rise in house prices. Likewise, a one percent house price increase translates into a 0.1 percentage point higher growth rate in mortgage credit.
This income effect of interest rates was still positive in the early 1990s. Then, households on average profited from higher rates, because they owned less real estate and more interest-bearing assets. In the current environment, competition among banks for customer deposit may lower the mentioned 0.7pp average effect on households in the short run. It is likely, however, that these benefits accrue mainly to those with higher financial wealth and thus less at risk of losing their homes.
Mortgages are collateralized by the property and income of the mortgagee.
In 2006, more housing units were under construction in Spain than in Germany, France, Italy and the UK combined. Bover and Jimeno (2007) explain the distinct reactions of construction activity to house price increases amongst countries with remaining building possibilities, using population density and persons living in free-standing houses as proxies. Their result is that in countries with few spatial building constraints, including Spain, relative employment in construction increases by roughly 0.5 percent for every 1 percentage point increase in real house prices. In dense countries, such as the UK, construction activity hardly reacts.
INE’s long run population projections from 2002 initially underestimated population growth. The staff scenarios construct a transition from this higher population growth to the INE long-term projections (Table 1).
We choose the average of housing starts and finishes in 1983 as the starting point for the perpetual inventory method. Between 1980-83 the amount of housing starts and finishes in each year were very similar and exhibited little fluctuation. In addition, the long time frame between 1983 and the present will minimize the impact of the starting value on our results.
As housing sector employment we define employment in the residential construction and real estate services sectors. Notes under Table 2 explain the construction of this series. Employment in real estate services is only 10-12 percent ofthat in residential construction, but has more than doubled in the last 10 years.
Little change since the 1991 census hints at unfavorable structural factors -such as landlord-unfriendly rental laws – forestalling a more efficient use of the housing stock.
Callau and Pac’s calculations implicitly assume that all newly formed households moved into new homes with none moving to homes that existed before 2001.
See e.g., El Mundo (2008). Furthermore, Garcia-Montalvo (2007) finds that financial variables were almost exclusive drivers of the most recent housing cycle, while demographic variables were paramount in previous cycles.
More than half of new homes were bought before they were finished during 2002-06 (Ministerio de Vivienda, 2008).
Specified levels of overvaluation were estimated for different years. See Ayuso and Restoy (2006), Bank of Spain (2004), Girourard et al. (2006), IMF (2008) and Sosvilla (2008).
Subsidies make interest rates on loans (up to 80 percent of the purchase price) attractive. Additionally, there is a subsidy of up to 11,000 euros to cover the down payment.
OECD (2005) points out that approvals for purchase of a social housing unit are based on current rather than permanent income. Thus, households remain in social housing despite increases in income, thereby reducing availability for families in need.
OECD (2005) reports that rented subsidized housing only made up 6 percent of the housing stock and only covered 35 percent of poor households (European averages are of 14 percent and a coverage of 73 percent).
Deferred payments are to be repaid over 10 years.
The total rental stock is around 12 percent of housing, but half of this is accounted for by social housing (OECD, 2001 and 2005).
See Box 2. Also, OECD (2008) confirms that plans to speed up conflict resolution have been partially implemented with 6 out of 10 planned new courts in high eviction areas already in service.
High incidence of temporary contracts causes the young and immigrants to be laid off first in downturns. In the year to 2008-Q2 employees aged 35 and under lost 246,000 jobs, while older workers gained 320,000 (Tinsa, 2008b).
Other important measures making homeownership fiscally attractive are no taxation of imputed rents for owner-occupiers, a reduced VAT rate for residential construction and favorable treatment of capital gains. See OECD (2007) for more details on fiscal treatment of housing in Spain.
Lopez-Garcia (2003) obtains a similar result in the range of 15–30 percent.