House Purchase Versus Rental in Spain
Bank of Spain, Research Department
affiliation not provided to SSRN
Banco de España
April 20, 2011
Banco de Espana Working Paper No. 1108
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.
Number of Pages in PDF File: 36
Keywords: Rental market share, subsidy to house purchases, subsidy to rents, rental market efficiency
JEL Classification: E21, E3, E51, E6working papers series
Date posted: April 22, 2011
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