[louison11]

Blaming foreigners for housing prices is misdirected. The real culprit is slow bureaucracy & zoning laws making it impossibly slow to get a permit to build anything in both Spain and Portugal. Both of these countries for example have so many abandoned houses needing to be renovated, and so many foreigners coming in with money to do it - but they can never do it because you can't get a permit in literally forever... I don't know about Spain, but another problem in PT is the building companies too, are unreliable, and typically don't deliver houses in less than 3-5 years if you decide to build new. Increase the supply, and the prices will go down.

[WorkerBee28474]

No, that argument assumes you can only blame 1 thing at a time.

Even if the bureaucracy is the worst offender, every foreigner buying a house still results in 1 less house for Spaniards.

Sure, fix bureaucracy, but don't pretend foreign purchases have zero effect.

[JumpCrisscross]

> every foreigner buying a house still results in 1 less house for Spaniards

In a very limited scope, sure. What that foreign capital also does is lower risk and thus capital costs for development and improvement. (In the event of a limited crisis, for lenders as well.) Whether the net effect goes one way or another is more complicated than what you describe.

Put another way, if foreigners could only buy unbuilt units, would you still say they're resulting in fewer houses for Spaniards? Do the countries shunned by foreign investors have affordable housing?

[motorest]

> Put another way, if foreigners could only buy unbuilt units, would you still say they're resulting in fewer houses for Spaniards? Do the countries shunned by foreign investors have affordable housing?

Exactly, and to further drive the point home the real estate investments driven by foreign investment are targeting entirely different markets, such as luxury homes and tourism, whereas the complains about lack of access to housing come from those who already struggle to buy the cheapest units in working class suburbs, where the foreign investments are clearly not being made.

So the question you should be asking is how come you're not seeing investments in affordable housing across the country at a time where you see foreign investment in luxury and tourist areas. Then you'd realize that you're discussing two entirely different things that bear no relationship.

[est31]

Often, very often, foreign investment is directly correlated with tourism-gentrification, aka driving out the poor working class people from some location, because it looks "authentic" and is centrally located, into ugly looking places at the outskirts of the city.

But this can happen whether people from outside buy it or not. As long as there is demand for tourism, and some countries are richer than others, this will happen.

[rgtank108]

What is this contrarian sophistry? In Europe foreigners often buy the most expensive historical real estate they can lay their hands on.

If they do build something, it is office buildings for investment that take up space and often remain empty (Chinese are good at that). These investments still take up space and drive up real estate prices.

Where do you even live?

[JumpCrisscross]

> In Europe foreigners often buy the most expensive historical real estate they can lay their hands on

Source? (I'm generally hugely sceptical of uniform statements about how capital behaves across the EU, let alone Europe.)

[ryan_lane]

Where's the source for your assertion? You're making a claim that foreign investment is beneficial with no source, but then requiring one when someone disagrees with you?

[sadeshmukh]

A theoretical argument was countered with an assertion - it's plausible that investment -> lower risk, but there is no reasoning to get "foreign investment is focused on X area".

[WorkerBee28474]

A source is not required for something to be true. An uncountable number of things that are true have no source to back them.

[motorest]

> A source is not required for something to be true.

If it was really true then why would you have so much trouble providing anything at all that would back it up?

[motorest]

> What is this contrarian sophistry? In Europe foreigners often buy the most expensive historical real estate they can lay their hands on.

Yes, they make real estate investments in luxury and high-end sector, some of which boarded up for decades.

It's not like your average working class citizen is on the house for a manor house in the city center.

These are not the same markets.

[louison11]

I'm not saying it has zero effect. I'm saying it's a misdirected effort that would cause them more harm than good. Spain isn't exactly in the fittest economic position. It needs to attract foreigners to cultivate its growth - hence their Beckham law and other benefits for foreigners. You can deter people from coming and see the country stagnate/go down, or you can actually match the demand and foreign dynamism, and use that as an opportunity for the whole place to grow and modernize.

[throwaway4aday]

This is a quick "fix" that has a lot of unintended consequences. I've seen it first hand and the only people it benefits are those who are already wealthy. Everyone else gets a lot poorer as their cost of living skyrockets. Homelessness explodes as rents and housing costs increase dramatically, people who were living a humble but decent life before are pushed into poverty, crime both non-violent and violent increases and so does drug use. As far as I can tell the only people that actually benefit from this scheme are landlords and housing developers who slow walk their projects so that they can charge the maximum price per unit. Compared to the previous fairly stable state (which you call stagnation) the locals are much worse off. It also tends to ruin the character of places that were previously seen as a vacation destination for a unique experience, all of that just gets paved over and turned into a bland tourist trap barely different from any other place. Count yourself lucky if you live somewhere that has been passed over by this horrid money making scheme.

[delroth]

How does allowing *non-residents* to buy real estate help in attracting foreigners and cultivate growth?

[louison11]

Money invested from abroad is money coming inside the economy - whether the person lives there or not. That money goes to the seller, who'll then get taxed on it, spend it somewhere else... Or that money could be used, as I said, to build new buildings and rehabilitate old ones, thus creating jobs in the process. If the system was well set up for it, foreigners investing in a country is usually a good thing. The US is super foreign-investment friendly for example, doesn't hurt them.

Besides, if foreigners are investing solely to speculate - if they did fix the supply constraints, the opportunity for speculation would greatly decrease. It's only an attractive investment because the supply is so finite.

[whazor]

Alternatively, I got my current house because of KYC laws.

The house bidding was originally won by someone abroad. They overbid the house by a lot. However, because of the KYC laws, that person needed to proof their income is legitimate, which they couldn’t. Therefore, we got the house.

Building new houses costs 10 years in my country. So building new houses is not fast enough to create new affordable houses.

[throwaway4aday]

Worked great for Vancouver /s

[JumpCrisscross]

To be fair, you're referring to one of the largest and fastest-growing economies in Canada [1]. (It also has a massive affordability crisis despite a ban on non-student foreigners buying expensive real estate.)

[1] https://www.katrinaandtheteam.com/blog/vancouver-bc-economy/

[iforgot22]

In a hot real estate market, there will be more market pressure to fix the dilapidated properties in good areas.

Say they instead keep values artificially low so an EU resident can buy a property for cheap, and it stays cheap. What's the benefit?

[fabrice_d]

The benefit is that more people can afford to buy houses? Really surprising to see a country taking care of their people, and not just the wealthy ones!

All the hypotheses claiming that "the market pressure will improve things for all" have been proven false at this point. We have decades of data, and this is only widening the inequality gap.

[motorest]

> The benefit is that more people can afford to buy houses?

Can they? I mean, what is your plan to lower current housing prices? Cut off demand from foreigners with purchasing power and instead replace it with demand from people who cannot afford a home? They are not even the same housing market, are they?

[iforgot22]

I don't see why this is better than people renting and investing their savings elsewhere, which is how it works with apartments anyway. So you own a house, it makes basically no return, now what?

[klipt]

You could also argue that every Spaniard moving from the countryside to the cities takes away houses from Spaniards born in the cities.

Seems like an argument for internal visas like China's household registration system to prevent excessive migration to the cities.

The countryside is mostly emptying out so no need to prevent people moving or buying there.

[Teever]

That comparison make sense in a world where the well being of a nation's citizens wasn't the priority of a nation.

However we live in a world where that isn't the case so a nation deciding to restrict immigration or economic activity by foreigners for the benefit of the domestic population is an acceptable position to take -- provided it actually have that desired outcome.

[klipt]

Spoiler: it won't help much.

Liberalizing zoning and taxing land would do more to improve housing affordability.

[JumpCrisscross]

> Seems like an argument for internal visas like China's household registration system to prevent excessive migration to the cities

With the big difference being the Chinese citizen being denied Beijing hukou is still a Chinese citizen. Madrid should properly first concern itself with Spaniards' wellbeing. (This isn't an argument for or against this policy. Just clarifying why restricting non-EU home purchases is different from hukou.)

[creer]

> every foreigner buying a house still results in 1 less house for Spaniards

Absolutely not. For example my impression is that foreign demand has been great for the construction industry, both small and large, both in Spain and Portugal. Paying lots of people directly and still more indirectly. The presence of all these buildings that needed renovation (or demolition) shows that the population previously could not afford to use them. Dumping money in the economy causes some inflation, yes, but it also pays many people and allows still more to enter the field.

[Gibbon1]

I have various thoughts. The rough one is that investors driving up the cost of housing increases the countries labor costs. Which harms it's competitiveness. Reduces workers standard of living. Which also causes headaches for political leaders.

Foreign investors rub salt in the wound by moving their gains outside the country. And the real risk that they will flee when there is any sort of downturn making it worse.

My opinion giving those guys the middle finger isn't unreasonable.

[alecco]

But the foreign investors are doing it because the housing market has an artificial supply shortage. They are buying into a cornered market.

Of course, full deregulation is not a fix as seen with the condos built in ridiculous locations back in the sub-prime mania.

It would be good to have a reasonable plan. Sadly the plans for making livable neighborhoods was hijacked by the "15 minute city" WEF-style politicians. The Netherlands had some very interesting projects that went pretty well.

[surgical_fire]

> Even if the bureaucracy is the worst offender, every foreigner buying a house still results in 1 less house for Spaniards.

Just to be pedantic, it's not about foreigners buying property, it is about non-resident buying properties.

A foreigner that actually resides in Spain would not be taxed, if I understand correctly.

I don't think that limiting property ownership to residents is a bad thing. I do think, however, that it will not have that much impact in the properties the average people actually need and want.

[ETH_start]

Every foreigner buying a house is supplying capital for one additional house to be built, and some portion of those additional houses will be unoccupied by the foreigner most of the year and available on the rental market for locals.

Even if it's just short term rentals, that means more affordable vacations and temporary housing for the domestic population.

[mkoubaa]

This is one of those arguments that at face value seems quantitatively sound but doesn't survive first contact with reality

[ETH_start]

And your claim that it doesn't survive first contact with reality is based on you correlating high volumes of foreign investment with lack of housing affordability and assuming that the former is causing the latter, when the correlation is really due to a confounding factor.

[iforgot22]

Even if it's causing it, the city isn't vacant. There are people who can afford to live there. Only the people who can't afford it complain.

[mytailorisrich]

The issue not mentioned because it is a very politically charged topic is that, as I understand, net migration to Spain is at an all time high.

This is bound to push housing prices up.

Hitting foreign investors is easier politically but may not have much effect.

[ptero]

Foreigner purchase effects are complex.

While a unit sold does immediately reduce the supply by 1 unit, new demand and foreign funds can also stimulate more building and, especially important, can prevent areas falling into disrepair and becoming ghost towns. It really depends on the specific area and situation. My 2c.

[AuthorizedCust]

If you’re in oversupply, as the parent comment suggested, then is the effect of additional buyers meaningful?

[WorkerBee28474]

If you have extra supply of houses needing renovation, as in the comment, and renovations require labor and/or materials to complete, having foreigners pay to renovate houses to be livable will decrease the ability of Spaniards to renovate houses to be livable.

For example, let's assume renovations are 100% completed by local crews. Any crew working for a foreigner is working for them because A) the foreigner is paying more than a local for the work B) the foreigner is paying enough to make a profit and the local isn't (which is a subset of A). There is no situation in which adding foreign money results in more houses for locals. If you eliminate the ability for foreigners to renovate, the renovation crews will take the money that the locals can pay. There will be fewer renovation crews, because some crew will not be profitable at the lower rate, but more crews working to renovate houses for Spaniards.

Similarly, for materials, given supply and demand curves (and assuming that the marginal units added won't cause economies of scale) eliminating the ability for foreigners to buy materials for renovations will move the curve intersection down to a lower price and volume.

[JumpCrisscross]

> There is no situation in which adding foreign money results in more houses for locals

Assuming fixed supply, yes, it's (probably) a zero-sum game.

> eliminating the ability for foreigners to buy materials for renovations will move the curve intersection down to a lower price and volume

Assuming a frictionless market and no economies of scale, yes. In reality, you'll have a smaller set of options for locals at a slightly (but not dramatically) lower price. (Again, for an example look at all the markets foreign investors shun.)

> will be fewer renovation crews, because some crew will not be profitable at the lower rate, but more crews working to renovate houses for Spaniards

You absolutely cannot conclude this from first principles.

You make valid points. They just need to be followed up with data. The systems you're talking about are too sensitive to generalise like this.

[gruez]

So would you say it's fair game to blame "migrants" for crimes? After all, you can't steal something if you're not in a country, so letting someone into a country strictly increases the crime rate. Even if migrants commit crimes at a lower rate than the local population, unless it's exactly zero, it'll still increase the crime rate.

edit: downvoters, I'm not actually endorsing blaming migrants. It's only used as an example.

[d4704]

> Even if migrants commit crimes at a lower rate than the local population, unless it's exactly zero, it'll still increase the crime rate.

But that assumes you do not count the person who commit the crime as part of the population count.

In this example, “crime per capita” goes down if they commit crime below the average crime rate of population before they joined that population.

[gruez]

>But that assumes you do not count the person who commit the crime as part of the population count.

Sorry, meant to say "crime count", or more precisely, "native victimization count". Natavists by definition prioritize the native population over immigrants, so if some native got victimized by a migrant, I doubt a natavist would be convinced by "well actually, even though there was one extra crime committed by a migrant, there's also 10,000 (or whatever) more people, so the crime rate actually went down!"

[llamaimperative]

Do crimes have a liquid market with supply and demand mechanics?

If so, then sure, you can blame every criminal for x% of every crime, I guess.

[gruez]

The comment was in reply to:

>Even if the bureaucracy is the worst offender, every foreigner buying a house still results in 1 less house for Spaniards.

It's pretty clear that supply and demand isn't a consideration here, and the commenter is strictly focusing on the aspect that one house is being removed from the housing supply.

[llamaimperative]

If you remove a house from the supply, by any method, there is one fewer house in said supply.

[vivekd]

I donno if it entirely wrong to blame foreigners. If you have a bunch of silicon valley digital nomads flying to Spain and buing and selling houses to each other I can see how that could easily leave locals out of the housing market. That seems like something that government should control against if locals can't affording housing.

I imagine that if a bunch of rich people decided to treat Spanish homes like stocks (holding and flipping) it would be pretty easy to get high prices and bubbles. Doesn't it follow from suppy and demand?

>Increase the supply, and the prices will go down.

what's wrong with tackling both demand and supply. Why shouldn't spain do both - build more homes to tackle supply while also curbing foreign home ownership to tackle infalted demand

[motorest]

> Both of these countries for example have so many abandoned houses needing to be renovated, and so many foreigners coming in with money to do it - but they can never do it because you can't get a permit in literally forever...

Are these hypothetical houses located in the places these hypothetical foreigners want to live or invest? Because getting a small apartment in Barcelona is a small feat, and Soria is not exactly an alternative.

[honestSysAdmin]

Bloated/unnecessary bureaucracy is essential to the bribe collection process.