The housing to come

3 February, 2021 · News> Europe> Spain

Mortgage signings are falling, funds are hitting record numbers of rental properties, and construction is reviving with their requests: they want properties because they believe that a good portion of workers will be living in rented housing from now on. The recession and hedge funds are shaping your life and your city for decades to come. Both your life and your city will be more precarious and will offer less room for you.

A trend born of the previous recession, accelerated by the current one

The bursting of the housing bubble left a gigantic and devalued housing stock in the hands of the banks. The speculative model of housing was reorganized and redirected towards its exploitation for rent by the new owners of an immense stock: the equity funds. The fact that rents rose more than sales signaled the definitive step into a new stage in which more and more capital would take refuge in the exploitation of rents. And the brutal recession of 2020 could not but push even more capital down the same path.

The recession concentrates real estate ownership broadly in the big funds…

Now the development of the crisis is devaluing Spanish capital at an accelerated pace, putting big companies such as Naturgy within striking distance of a takeover bid. But we should not only look at listed companies or industrial companies. After the collapse of tourism in 2020, hotels have become massively indebted and at this point the banks are demanding that they sell their facilities if they want to refinance their debt: if they have no income from the sale of services, they should obtain it by decapitalizing. The consequent fall in price of large hotels and tourist facilities is leading real estate investment funds such as Amancio Ortega’s Pontegadea, to buy and concentrate properties, giving a pattern to all the speculative capital.

…and further reinforces the new speculative system

Housing was not going to be any different from the rest of real estate. At this point, the 40 largest owners (Blackstone, Caixabank, the Texan fund TPG, Sareb…) directly or through real estate companies and SOCIMIs own 115,085 houses, 4.2% of the rental stock. That is, they can already influence prices in general and many of them set them in specific areas. A speculator’s dream.

And this is only the first step. Today’s data speak of 219,000 less Social Security affiliates and 36,000 more workers under temporary lay-offs. The government expects an avalanche of temporary layoffs and therefore a brutal rise in unemployment over the coming months. Who can afford to buy a house? No wonder that despite the lowest euribor (daily reference rate of European averaged interest rates) in history – -0.5%- the number of mortgages signed in October fell by almost 6% compared to the same month of 2019 and that in November it fell by even 2.4% more.

The worker who does not own a home but has a job cannot risk taking out a loan in the midst of the current job uncertainty. The one who owned a house and lost his job is often forced to sell it to earn income. Result: property is concentrated and the rental business continues to grow. And it does so to such an extent that a good part of new construction is already destined for renting: 90,180 houses are planned for renting in the coming years.

A horizon of precariousness in all dimensions of life

Micro-apartment in London. Rent is equivalent to an average salary.

Capital is shaping the city of the next decade at an accelerating pace. We see it in a whole series of related phenomena, from the extreme precarization of co-living and mini-housing, to the expulsion of workers from hitherto quasi-central neighborhoods under the new post-pandemic urban plans.

Starting from the precarization of labor, everything that until now had brought some (semblance of) security to our living conditions is destroyed. The coming city, the city coming after reconstruction, will be the refuge of even more speculative capitals organized in funds. And it will give us no room.

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