How housing is exacerbating inequalities in the city of Barcelona

Illustration © Cinta Fosch

Having witnessed a dismal response to the financial crisis of 2008, the city of Barcelona urgently needs to put an end to the evictions of vulnerable families and guarantee the right to housing. The negligible amount of public housing stock, high domestic and foreign demand and the scarcity of available land are exacerbating the crisis. A social pact for housing is necessary to tackle the crisis.

All the studies on inequality address the issue from the perspective of households’ earnings, disposable income or economic capacity. The S80/20 inequality ratio1 showed that, in 2021, in the city of Barcelona, the richest 20% had 6.1 times more income than the poorest 20%. This figure is higher than the rest of the metropolitan area (5.8) and the average for Catalonia (5.4), pointing to a deeper problem of inequality in the city.


Reducing inequality is the tenth United Nations Sustainable Development Goal, which states that, “despite the progress achieved in some domains in recent years, inequality is one of the greatest challenges of our time and is an obstacle not only to development, but also to peace and to ensuring human rights”. The policies put forward to move towards this goal are economic in nature, to improve working conditions, raise the minimum wage and redistribute taxes and profits to make them more equitable.


However, inequality should be analysed not only from the point of view of income, but also from the perspective of household spending. In countries with strong welfare states, lower-income groups of the population can spend this income on current consumption, as they are guaranteed basic health, education and housing services. By contrast, in countries with weak welfare states, household incomes are effectively reduced by the costs they have to incur in these very areas.


There are no synthetic indicators available for both sides of inequality, but it is a rough estimate to say that, in the case of the city of Barcelona and its metropolitan area, 20% of the highest-income population tends to live in a fully paid-for property, while 20% of the lowest-income population generally lives in rented housing at market prices, to which they must allocate more than 50% of their income. Understandably, in practice, this translates into a worsening of inequalities in terms of net income available for current consumption, and places this poorest 20%, who are highly sensitive to housing price fluctuations, in a very vulnerable position.


Necessary housing policies

For this very important reason, housing policy in a city like Barcelona and its metropolitan area is a key element in the fight against inequality. And it is clear that the fundamental challenge of this policy today is to reduce the burden of housing costs borne by middle and low-income households, which are the ones that, for the most part, live in rented accommodation.


It is well known that the primary purpose of housing policy is to ensure a sufficient supply of housing at prices that are in keeping with households’ capacity to pay, as well as to cover the housing shortages generated by free market dynamics. In some cities, such as Vienna, the housing system can serve the purpose of mitigating market shortages thanks to its vast public and rent-controlled housing stock. But this does not apply to Barcelona, which has a highly limited public housing stock and has witnessed the gradual disappearance of the stock of subsidised housing for sale or old leases that are rent-controlled.


When it comes to moving towards similar standards to those of some European cities in terms of the capacity to respond to the challenges of affordable housing, Barcelona is confronted with two specific factors that play strongly against it: it is a very attractive city, both for residents and for visitors, and it is limited geographically. The combination of these two characteristics makes it one of the cities with the most pronounced gaps between housing demand and supply, with the ensuing price pressures.

Barcelona is indeed a limited city. Although it is the largest city in Catalonia (a population of 1.6 million people), the high demand for housing surpasses its spatial possibilities. The potential for urban growth is limited and, for more than 40 years, it has had annual shortfalls in terms of housing provision for people who would like to live in the city. In the years of peak housing production (1997-2009), the highest annual figure reached was less than 5,000 units, whereas the city’s demand (calculated on the basis of the need to create new homes and the need to replace the existing stock) would be approximately 10,000 housing units per year.


As a result, the population’s exodus to surrounding metropolitan areas has continued unabated. And, needless to say, this insufficient supply-demand ratio translates into Barcelona’s housing prices. From the beginning of the century to 2021, prices of new buildings have risen by 150%, and rents by 100%, while gross household disposable income has risen by only 25%. Many households are insolvent as a result, which bears a direct impact on inequality.

Illustration © Cinta Fosch Illustration © Cinta Fosch

Moreover, Barcelona is an attractive city. Throughout the polls carried out, residents and children of residents clearly express a desire to continue living there. However, since it is also a magnet for tourists and investors, this undoubtedly puts pressure on property demand and land prices. The need for primary housing has to compete with demand for recreational and temporary accommodation, which is capable of fetching prices well above the average household income. Room rentals also play a role in price hikes. And let us not forget that tourism demand, seasonal demand and demand for accommodation have, besides the impact on prices, another detrimental effect on the housing stock and on citizen coexistence: overcrowding, which can be simultaneous in time – more people share a dwelling than would be required by minimum living standards – or successive, with a constant change of users. This also exerts an impact on inequality.


Addressing a complex constellation of problems

Housing policy is forced to contend with the tough and complex challenges of the three aforementioned parameters: a small public and price-controlled stock, high demand (internal and external) and limited available land. The most obvious and serious consequences of these peculiarities of the city are, in demographic terms, a delay in the age of young people becoming emancipated, the loss of young people and an ageing of the population that is more evident than in the surrounding area. And in the social arena, the consequences have been the loss of the middle-income population and the polarisation of inequality, which is particularly visible between neighbourhoods; high residential vulnerability due to housing insecurity and uncertainty; home evictions due to the inability to afford the cost of housing; and overcrowding.


Dealing with this intricate tapestry of challenges is no easy feat. It calls for measures that are not always well received by the population or by some agents, which makes it imperative to establish some sort of social pact for housing that will bolster the decisions that are taken and will prevent strategies to guarantee citizens’ right to housing from becoming the subject of permanent debate.

The supply of affordable and social rental housing must be increased with new construction and, to do so, public land will need to be developed more quickly by the Barcelona Municipal Institute of Housing and Renovation (IMHAB) and the Catalan Housing Institute (Incasòl), and agreements with non-profit organisations and calls for tender for operators committed to subsidised housing need to be strengthened. Work will also have to continue on the construction of public housing, mobilising the private land set aside for subsidised housing that is already planned and realistically adapting the 30% requirement for subsidised flats in new private developments.


Similarly, affordable and social housing supply must be increased on the basis of the existing stock, increasing the budget for acquiring buildings by means of the right to first refusal. There is also a need to arrange rental housing at below-market prices for young people and the elderly with private owners through public aid and guarantees, to continue to control the use of properties for tourism in order to limit its impact and revoke licences given to ordinary residences, and to facilitate the change of use of disused commercial premises for housing and other possible changes of use for public and private buildings.


Declaring the city of Barcelona a stressed area will allow mitigating measures to be implemented to curb rent prices, but the development of tourism-oriented properties and the regulation of seasonal and room rentals must also continue to be monitored.


The city bears the brunt of a poor response to the 2008 financial crisis and urgently needs to put an end to the evictions of vulnerable families that have been going on since then. Improving rental and mortgage assistance is an excellent preventive measure. But, above all, a new approach will have to be introduced, consisting of arranging social housing with the private sector for families with financial problems. And to continue working with third sector organisations to rent private housing and allocate it to vulnerable families and to eradicate homelessness.


One of the key commitments now and in the future, as the city’s potential is depleted, will be to address the city’s housing problems from within the metropolitan area. This means that the lower-income population will see a reduction in the burden of housing costs as a means of effectively reducing inequalities.

[1]  The S80/S20 ratio is an equivalence scale that measures the inequality of household income distribution in a calendar year.

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