Housing has become one of the most politically charged economic issues in Spain. Rising rents, the difficulty of finding available apartments, and the increasingly delayed transition of many young people into independent living generate understandable frustration. When access to an essential good becomes difficult, the temptation quickly arises to identify a visible culprit: landlords, property platforms, investment funds, speculators, or simply “the market.”

Yet identifying a visible participant in a market is not the same as identifying the cause of scarcity.

A recent discussion about screenshots from Idealista in which the number of rental listings changed considerably within a few hours illustrates the problem well. A screenshot may attract attention, but it cannot establish causality. Listings can change because of duplicates, technical adjustments, completed transactions, changes in search criteria, or many other factors. An economist, in particular, should avoid turning an anecdotal observation into empirical evidence simply because it appears to confirm a prior theory.

The truly interesting question is not what happened on a website over twelve hours. It is why housing is so difficult to find in places where so many people want to live.

Prices Can Be Capped; Scarcity Cannot

It is useful to begin with elementary economics.

Prices perform a coordinating function. When demand for a good increases and supply cannot respond sufficiently, its price tends to rise. A regulation may prevent the observed price from making the full adjustment, but it cannot eliminate the underlying imbalance between the quantity people want and the quantity available.

This does not mean that rent controls have no beneficiaries.

A tenant who remains in a regulated dwelling and pays less than would have been paid in the absence of regulation receives a real benefit. Serious economic analysis should acknowledge this.

But that is only the visible part.

When the regulated rent is set below the level that would coordinate supply and demand, more people seek access to regulated housing while landlords and potential investors face lower expected returns. Adjustment can then occur through other channels: properties leaving the rental market, investments that never take place, reduced maintenance, more selective screening of tenants, alternative contractual arrangements, or people remaining in homes that no longer fit their needs well.

The IMF’s latest analysis of Spain is particularly instructive. Studies of Catalonia’s 2020 rent-control regime generally find rent reductions of approximately 4–6%, but also negative supply responses, with estimated declines in new listings ranging from roughly 15% to 30%, depending on the study. The IMF appropriately cautions that portal listings are not the same as completed transactions and that composition effects may be present.

The conclusion is not that every regulation automatically causes a predetermined percentage of homes to disappear.

Rather, we cannot study the effect on price while ignoring the response of supply.

Spain Also Has a Supply Problem

Spain’s housing problem cannot be reduced to rent controls. The deeper issue is the capacity of supply to respond to demand.

El Banco de España  lleva tiempo llamando la atención sobre ello. La producción de vivienda nueva permanece en niveles mucho más modestos que en anteriores fases expansivas y se han acumulado déficits de vivienda especialmente en determinadas zonas de fuerte demanda. Sus estudios sobre alquiler señalan asimismo la rigidez de la oferta y la conveniencia de diseñar una regulación capaz de estimularla.

The IMF was even more explicit in 2026. Strong demand, supported by population growth, net immigration, and lower interest rates, has encountered rigid supply. Its recommendations include accelerating urban development, making more land available for construction, simplifying permitting, and reducing legal uncertainty surrounding projects.

The distinction is fundamental.

If 120 households are looking for housing in a particular place but only 100 suitable homes are available, we can debate how those one hundred homes should be allocated and what price may be charged.

But twenty homes are still missing.

Scarcity does not disappear by decree.

Germany Has Already Conducted Part of the Experiment

Germany is particularly useful because it has experimented with different forms of regulation.

The Mietpreisbremse, introduced in 2015 and subsequently expanded, was intended to moderate rent increases in tight housing markets. Because newly constructed housing was generally exempt, one might expect it to protect tenants without significantly affecting investment.

A new DIW Berlin study published in 2026 calls that conclusion into question.

Using administrative data from nearly 11,000 German municipalities between 2010 and 2024 and difference-in-differences methods adapted to the staggered introduction of the policy, the authors find a statistically significant negative effect on residential construction, particularly multifamily housing. They identify regulatory uncertainty, higher risk premia, and lower expected rental revenues available to finance investment as possible mechanisms.

DIW Berilin subsequently went much further with the Mietendeckel. While it was in force, the measure reduced advertised rents for the affected properties. But DIW research also finds a significant decline in the number of properties advertised for rent and suggests that some units permanently left the rental market.

The distinction is crucial: making certain regulated rents cheaper is not necessarily the same as making housing easier to find.

England Should Study the Evidence Before Repeating the Experiment

England is not Berlin.

The Renters’ Rights Act 2025 represents a major reform of the private rental market. Since May 2026, Section 21 “no-fault” evictions have been abolished, assured tenancies have moved to a periodic model without a fixed end date, and various rules governing rent increases and landlord–tenant relations have changed. England does not, however, currently have a general system of rent-level controls equivalent to Berlin’s former Mietendeckel.

Precisely for that reason, it is useful to examine the evidence before moving toward broader price controls.

In August 2026, the Institute for Fiscal Studies published a particularly balanced review. It recognizes that controls can reduce costs and uncertainty for some protected tenants. However, the international evidence it reviews consistently finds adverse effects on rental housing supply: some landlords sell, others change the use of their properties, and some studies also find lower construction.

The point is not to deny that protecting tenants can be a legitimate social objective.

It is to ask whether controlling prices is an effective instrument when the underlying problem is insufficient supply.

Receiving Rent Does Not Require a Landlord to Become a Builder

Another conceptual confusion deserves attention here.

A rental dwelling provides the services of a capital good.

Someone has accumulated capital, acquired or constructed an asset, and temporarily transfers the right to use it to another person in exchange for rent. The tenant obtains housing services without first having to accumulate all the capital required to purchase the property. The owner receives compensation for making the asset available while bearing the costs and risks associated with ownership.

Nothing in this relationship implies that every euro received in rent must be reinvested in constructing another dwelling.

Applying that logic to the rest of the economy would produce strange conclusions.

A shoemaker who earns income by selling shoes is not required to devote every euro to producing more shoes. A taxi driver who receives a fare does not have to purchase another taxi. Once income has been legitimately earned, it becomes part of its recipient’s resources and may be consumed, saved, or invested.

What encourages someone to produce more shoes, taxis, or housing is not a requirement that the current producer reinvest all of his or her income. It is the prospect of an expected return sufficiently attractive relative to the risk involved.

That is precisely one of the functions of capital markets.

Savings need not remain in the hands of the person who originally accumulated them. They can move toward investment opportunities through banks, funds, securities markets, business credit, or equity investment.

The relevant question for housing should not be:

“Why did this particular landlord not use the rent to build another apartment?”

Rather:

“If rents and prices signal extraordinary scarcity, why are developers and investors unable or unwilling to expand supply sufficiently?”

That question leads directly to institutions.

A Large Company Is Not Automatically a Monopoly

Another common explanation attributes high prices to “monopoly.”

Market power deserves to be studied. Property platforms, developers, financial institutions, construction companies, and large landlords should not be exempt from competition analysis.

But the concepts should be used accurately.

A high market share is not automatically a monopoly, and a position achieved through innovation and consumer preference is analytically different from one protected by politically created barriers to entry.

The important questions are different: Can competitors enter? Can consumers switch providers? What prevents entry? And, above all, where do those barriers come from?

For years, Nokia appeared extraordinarily powerful in mobile telephony. It had no permanent right to retain its customers. Innovation and competition transformed that market.

Political barriers work differently. Licensing requirements, entry restrictions, regulatory privileges, excessively rigid planning, or rules whose costs fall disproportionately on new entrants can protect positions that competition might otherwise have eroded.

Public Choice theory is particularly useful here: rent-seeking, regulatory capture, and the use of political power can create economic privileges precisely by restricting competition.

We can, of course, study the degree of competition between Idealista and other platforms.

But Idealista does not build the apartments listed on Idealista.

Competition among platforms and the physical scarcity of housing are different problems.

The Invisible Tenant

Housing policy also presents a distinctive political-economy problem: its benefits are often concentrated and visible, while some of its costs are dispersed, emerge years later, and are extremely difficult to trace to the people who ultimately bear them.

A tenant whose rent is capped knows immediately that the policy has benefited him or her.

A person harmed by a home that was never supplied will probably never know it.

A young person unable to find an apartment in 2028 will hardly be able to identify the project that was not financed in 2026, the landlord who chose to sell rather than continue renting, or the development that remained trapped in administrative procedures for so long that it eventually ceased to be commercially viable.

There is no invoice stating:

“Cost caused by the home that was never built.”

But that cost exists.

And this asymmetry matters politically. Current tenants vote. Current homeowners vote. Developers can organize. Public authorities regulate. Yet future tenants and the people who would have occupied homes that do not yet exist have little representation at the moment when decisions are made.

It is a classic Public Choice problem.

Prices Convey Information

From the perspective of the Austrian School of economics, the problem goes beyond a simple supply-and-demand diagram.

Hayek’s insight into dispersed knowledge is particularly relevant. No authority possesses all the local information embedded in millions of decisions: where people want to live, what type of housing they need, which land could be profitably developed, what risks investors are willing to bear, or what alternative uses exist for capital.

Prices help coordinate that dispersed knowledge.

A high rent is unpleasant for the person who must pay it. But it also conveys information: a particular type of housing is in severe shortage in a particular place.

Suppressing the signal does not necessarily eliminate the reality that produced it.

Nor does this mean that every observed price is morally desirable or that the state has no role. Property rights require legal institutions. Fraud and breach of contract require judicial enforcement. Urban-development externalities exist. Assistance to vulnerable households can be justified. A society may decide to provide social housing.

But we should never confuse helping people cope with scarcity with eliminating scarcity.

A subsidy can change who bears the cost.

An additional home changes the quantity available.

They are not the same policy.

Bringing Production Back into the Housing Debate

Spain, Germany, and the United Kingdom have different institutions, housing stocks, and regulatory histories. Treating them as identical experiments would be poor economics.

But the comparative evidence leaves a warning that is difficult to ignore.

When housing is scarce, a policy that reduces the expected return from supplying it can make the problem harder to solve. This does not mean that every regulation produces exactly the same effect, but neither is there a good reason to believe that incentives cease to matter simply because housing is socially important.

That is why the debate should return to production.

How can more housing be built where people actually want to live?

How can planning and permitting be accelerated while preserving genuinely necessary safety and environmental protections?

How can legal certainty be strengthened?

How can private capital be attracted to long-term residential rental housing?

And how can vulnerable households be assisted without destroying the incentives to produce the very housing whose scarcity created the problem in the first place?

These questions may be less emotionally satisfying than blaming a landlord, a fund, a platform, or “capitalism.”

But they come much closer to the economic problem.

A law can set the maximum rent that may legally be charged for an existing dwelling. What no law can decree into existence is a home that nobody had the incentive, the capital, or the permission to build.

Wang, H. H. (2026, October 3). Scarcity Cannot Be Eliminated by Decree: Housing, Rent Controls, and the Politics of Supply.

Publication note: The Spanish version of this commentary was authorized by the author for publication on the website of the Instituto Juan de Mariana on October 2, 2026.