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House purchase versus rental in Spain

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  • Eva Ortega

    ()
    (Banco de España)

  • Margarita Rubio

    ()
    (Banco de España)

  • Carlos Thomas

    ()
    (Banco de España)

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.

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File URL: http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/11/Fich/dt1108e.pdf
File Function: First version, April 2011
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Bibliographic Info

Paper provided by Banco de Espa�a in its series Banco de Espa�a Working Papers with number 1108.

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Length: 36 pages
Date of creation: Apr 2011
Date of revision:
Handle: RePEc:bde:wpaper:1108

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

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References

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  1. Javier Andrés & Óscar Arce & Carlos Thomas, 2013. "Banking Competition, Collateral Constraints, and Optimal Monetary Policy," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 45(s2), pages 87-125, December.
  2. Matteo Iacoviello & Stefano Neri, 2007. "Housing Market Spillovers: Evidence from an Estimated DSGE Model," Boston College Working Papers in Economics, Boston College Department of Economics 659, Boston College Department of Economics, revised 23 Oct 2009.
  3. Pablo Casas-Arce & Albert Saiz, 2010. "Owning versus Renting: Do Courts Matter?," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 53(1), pages 137-165, 02.
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Citations

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Cited by:
  1. Margarta Rubio, 2014. "Rented vs. Owner-Occupied Housing and Monetary Policy," Discussion Papers 2014/09, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
  2. Coskun, Yener, 2011. "Does re-design of the policies on housing finance and supply help to solve housing question of Turkey?," MPRA Paper 31729, University Library of Munich, Germany.
  3. Sami Alpanda & Sarah Zubairy, 2013. "Housing and Tax Policy," Working Papers, Bank of Canada 13-33, Bank of Canada.
  4. Juan S Mora-Sanguinetti & Margarita Rubio, 2013. "Recent Reforms in Spanish Housing Markets: An Evaluation using a DSGE Model," Discussion Papers 2013/03, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
  5. Javier Andrés & J.E. Boscá & Javier Ferri, 2014. "Instruments, rules and household debt: the effects of fiscal policy," Working Papers, International Economics Institute, University of Valencia 1401, International Economics Institute, University of Valencia.
  6. Michael Funke & Michael Paetz, 2011. "Housing Prices and the Business Cycle: An Empirical Application to Hong Kong," Quantitative Macroeconomics Working Papers, Hamburg University, Department of Economics 21112b, Hamburg University, Department of Economics.

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