Cos maintains that the housing problem is solved with more supply

After the first weeks of application of the rental law, the governor of the Bank of Spain, Pablo Hernández de Cos, intervened yesterday on the debate, ensuring that what there is is a “problem of access” to housing and that the only formula to solving it is by stimulating more supply.

Oliver Thansan
Oliver Thansan
02 April 2024 Tuesday 22:25
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Cos maintains that the housing problem is solved with more supply

After the first weeks of application of the rental law, the governor of the Bank of Spain, Pablo Hernández de Cos, intervened yesterday on the debate, ensuring that what there is is a “problem of access” to housing and that the only formula to solving it is by stimulating more supply. In this way he answered a question during the conference that he gave yesterday within the framework of the cycle of talks Crossed Agendas: Madrid-Barcelona at the Círculo Ecuestre in Barcelona.

“We believe that the problem is in the supply and any measure that is not going to promote the incentive of supply is not going to solve the problem,” he said without directly evaluating the new rent control law that has just come into force. In his opinion “where we have to put all the focus is on generating the conditions for it to grow.”

Many economists believe that the new rule does not encourage more housing supply. The governor recalled that years pass between when new homes are planned and until they are finished.

During the meeting in which there were several dozen businessmen and managers, Hernández de Cos insisted that the “central scenario” he is considering is that interest rates begin to fall from June. He did not want to comment on what position will be adopted at the ECB (European Central Bank) meeting this month, although he hinted that changes would come from the summer. He wanted to highlight that the forecasts set are being fulfilled as was seen yesterday with the inflation data in the Eurozone that fell two tenths, to one tenth in March, to 2.4%. In his opinion, it is necessary to “take seriously” fiscal consolidation in Spain once the European Union will implement the so-called fiscal rules to control the debt and deficit levels of each country.

The governor reviewed the situation of the Spanish economy in which he assured that he was surprised by its good performance mainly because "public consumption has grown significantly more than expected", which has contributed three tenths more to the growth. “This upward surprise has caused us to revise growth for 2024 upwards by three tenths.” The estimated increase in GDP is 1.9% for this year.

Despite these good data, the governor issued two warnings of future risks. One is “private investment that has not reached pre-pandemic levels.” In his opinion, businessmen invest less due to uncertainty about policies and the shortage of labor, something he described as “paradoxical” in a country with a high unemployment rate. It is at 11.8%. The second dark cloud on the horizon – in the governor's opinion – “has to do with productivity.”

In recent days, criticism from employers' associations such as Foment has intensified over last week's regulatory development that establishes the increase in social contributions for the part of salaries that exceed 56,600, which until now were exempt from taxation. Hernández de Cos believes “it is probably not the most appropriate way” for the support of the pension system to come from increasing contributions precisely at a time when productivity must be increased.

The event began with a welcome from the president of the Círculo Ecuestre, Enrique Lacalle, while the governor held a dialogue with Manel Pérez, deputy director of La Vanguardia. Among the attendees, the presence of César González-Bueno, CEO of Banc Sabadell, Carlos Tusquets (Trea), Jordi Gual (IESE), Luis Conde (Salón Náutico), Fernando Casado (Asepeyo) and Ignacio Marull (PwC) stood out.