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Commentary 1 Title of the article The real estate sector opposes the fixing of rental prices Source of the article https://www.eleconomista.es/empresas- finanzas/noticias/10278450/01/20/El- sector-inmobiliario-se-opone-a-la-fijacion- de-los-precios-del-alquiler.html Date the article was published January 2, 2020 Date the commentary was written June 16, 2022 Word count of the commentary 793 Unit of the syllabus to which the article relates Microeconomics Key concept being used Intervention During the past year 2020, the large investors who had planned to make millionaire investments to build houses in Spain have been put on alert; this is due to a
document that ‘Unidas Podemos’ carried out together with the help of PSOE (Spanish Socialist Workers Party). In this document, both entities tried to do an intervention in rental prices and lower the increases that are taking place in some areas of Spain. These limitations obviously have a great impact on the business plans of these investors, so these measures can put their business plans at risk therefore the arrival or entry of high volumes of capital to the country of Spain. That is why, in this essay, we are going to analyze this type of fixation on the market and will be explained on a graphic way; where two cases are present. Also, the three possible phases that the negative effects of the measures that Spain will take place in the rental sector will be analyzed. From Europe, many experts are claiming that these measures or indices will not help the rental sector in Spain because these measures have been put into practice at Berlin and it did not work, on the contrary, they had a negative effect on the sector. Those people who are not familiar with this type of state intervention or microeconomic issues, I am going to make an explanation about why they are achieved and also about their positive or negative effects, since obviously specific reasons can be performed and then they may have some different effects. This type of market interactions is more specifically in the rental sector of Spain, where Unidas Podemos and PSOE have tried to pull off an intervention on rental prices and set maximum prices because the state considers that there is an unfair situation or there is a social distribution of income and not equitable (Brualla, 2020). Therefore, they try to set maximum prices; so that, everyone has access to a home. This is established in Spain’s Constitution, in fact, in
Note: Image created This cycle which generally is, it has produced and as I previously said in Berlin’s case, it has produced a negative effect that has three phases. In the first place, an imbalance is generated in the market as we have just seen, the equilibrium is in the middle and there is a surplus in the supply. Second, there is an excess of demand in the case of rental at Spain, there is an excess of demand; many people want homes that are cheaper. Finally, a black market is created and people start offering homes to those people who do not own homes, but at a higher price regardless of the state in question. This is extremely bad for all citizens, since the state has not control and is basically governed by what the people want and their interests. In fact, when the market is controlled by anyone, then there may be monopolies, unfair competition, and so on; various things or errors in the market that are incorrigible by the state because its own measure is producing an imbalance. Therefore, you cannot balance because what you would be doing is breaking your own measure. In conclusion, we can say that the real estate sector opposes the fixing of rental prices and the market intervention puts the plans of big funds at risk. In this case, this
measure could reduce supply and achieve the opposite effect. Also, the new regulation will surface the black market and generate more uncertainty. To lower rental prices, permits should be given for new construction in areas that are not protected and if the opportunity is given to build sustainable housing. In addition to balancing the balance of supply and demand, employment would be created. References: Brualla, A. (2020). El sector inmobiliario se opone a la fijación de los precios del alquiler. elEconomista. Retrieved on December 13, 2021, from https://www.eleconomista.es/empresas-finanzas/noticias/10278450/01/20/El- sector-inmobiliario-se-opone-a-la-fijacion-de-los-precios-del-alquiler.html
