The cotton test, the housing law in Catalonia, a hand on the market, does it work?

Housing Law in Catalonia: does it really work?

The Housing Law in Catalonia has generated a lot of controversy since its implementation. According to the Minister of Housing, Isabel Rodríguez, the regulation has managed to lower rental prices and guarantee stability for tenants, while at the same time working to increase the supply of housing. However, the reality seems to be more complex than it is presented.

The official discourse vs. the real data

On 16 March 2024, rental limits came into force in 140 municipalities in Catalonia, and in October another 131 were added. Despite the optimistic statements by political leaders about falling prices, the data compiled by the Generalitat’s Research Service tell a different story: the number of contracts is falling sharply, and prices have not shown a clear downward trend, except in specific cases such as Barcelona.

Are prices falling or are fewer contracts being signed?

The key to this apparent contradiction lies in how the data is interpreted. The Government highlights the reduction in prices taking as a reference the bonds deposited in Incasòl, but the truth is that if there are fewer new contracts, the old prices tend to fall by pure statistics. So, rather than a real drop in rents, what we are seeing is a drop in the signing of new contracts.

What are the concrete figures?

Idealista/news has analysed data from the 15 largest cities in Catalonia and concluded that the number of contracts has fallen by 21.5% since the Housing Law was implemented. Meanwhile, prices have only fallen in four cities (Barcelona, Tarragona, Girona and Cornellà de Llobregat), while in the rest they have remained stable or even risen.

The experts’ perspective

Experts in the real estate sector warn that, although price controls may seem beneficial for current tenants, they are having the opposite effect on those looking for housing. As supply shrinks and demand remains high, competition is increasing and landlords are choosing to rent only to those with the best financial solvency.

In addition, many landlords are beginning to consider selling their properties or repurposing them for other uses in view of the difficulties in renting. This could further reduce supply in the future, complicating access to rental housing.

Final reflection

Although the intention of the Housing Law in Catalonia is to guarantee more affordable rents, the data show a different reality: fewer contracts, prices that do not fall uniformly and an increasingly reduced supply. The question is: are we really achieving the objective of facilitating access to housing? Is it a good idea to intervene in the market in this way?