House Purchase Versus Rental in Spain

36 Pages Posted: 22 Apr 2011

See all articles by Eva Ortega

Eva Ortega

Bank of Spain, DG Economics, Statistics and Research

Margarita Rubio

University of Nottingham

Carlos Thomas

Banco de España

Date Written: April 20, 2011

Abstract

One of the most salient feature of the Spanish housing market, compared to other European economies, is its relatively low rental share. This may be partly attributed to the existence of fiscal distortions in Spain favoring ownership. In this paper, we simulate the potential efects of different policy measures aimed at homogenizing the fiscal treatment of ownership and renting and improving the efficiency of the rental market. We do so in the context of a DSGE model featuring a market for owner-occupied and rented housing, as well as collateral constraints in loan markets. We find that eliminating the existing subsidy to house purchases, introducing a comparable subsidy to rental payments or increasing the efficiency in the production of housing rental services raise the rental share by a similar amount. However, their implications in terms of the construction sector differ.

Keywords: Rental market share, subsidy to house purchases, subsidy to rents, rental market efficiency

JEL Classification: E21, E3, E51, E6

Suggested Citation

Ortega, Eva and Rubio, Margarita and Thomas, Carlos, House Purchase Versus Rental in Spain (April 20, 2011). Banco de Espana Working Paper No. 1108, Available at SSRN: https://ssrn.com/abstract=1816329 or http://dx.doi.org/10.2139/ssrn.1816329

Eva Ortega (Contact Author)

Bank of Spain, DG Economics, Statistics and Research ( email )

Alcala 50
Madrid, 28014
Spain

HOME PAGE: http://https://www.bde.es/investigador/en/menu/people/research_staff_a/Ortega_Eslava__Eva.html

Margarita Rubio

University of Nottingham ( email )

Carlos Thomas

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

HOME PAGE: http://www.bde.es

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