01 Jul The Housing Crisis: Unaffordability in Madrid’s Rental Market

Guillermo Romero Taranilla

IE Law School, IE University, Madrid, Spain

E-mail: gromero.ieu2022@student.ie.edu

Abstract

Madrid’s rental market crisis underscores a critical shortage of affordable housing. This unprecedented occurrence in the housing crisis is predominantly due to an imbalance in the supply and demand sides of the market; there is an insufficient supply of housing, consequently driving prices upwards to unaffordable levels. The crisis has led to widespread protests, highlighting the need for effective policy actions. There are two key policy options to address the crisis: an interventionist approach, which highlights price controls and public housing investment, and a liberalization approach, which aims to deregulate the housing market and encourage the private sector to take action. These two largely opposed viewpoints open doors to discuss the issues of price ceilings, public vs. private investment, as well as overregulation. Through the use of recent case studies as well as empirical evidence, this paper demonstrates that a liberalizing approach is needed in Madrid’s rental market. In short, gradual deregulation processes will allow the supply-side of the market to reflect its true capacity, which had been largely deterred by price controls and strict regulations.

READ THE FULL ARTICLE HERE (Page 1-15)

Keywords: deregulation, price ceilings, affordable housing