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House purchase versus rental in Spain

  • Eva Ortega

    ()

    (Banco de España)

  • Margarita Rubio

    ()

    (Banco de España)

  • Carlos Thomas

    ()

    (Banco de España)

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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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
Contact details of provider: Web page: http://www.bde.es/
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  1. Javier Andrés & Óscar Arce & Carlos Thomas, 2010. "Banking competition, collateral constraints and optimal monetary policy," Banco de Espa�a Working Papers 1001, Banco de Espa�a.
  2. Pablo Casas-Arce & Albert Saiz, 2010. "Owning versus Renting: Do Courts Matter?," Journal of Law and Economics, University of Chicago Press, vol. 53(1), pages 137-165, 02.
  3. Matteo Iacoviello & Stefano Neri, 2010. "Housing Market Spillovers: Evidence from an Estimated DSGE Model," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(2), pages 125-64, April.
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