BBVA México warned this Thursday that the control of rental prices in Mexico City could have negative consequences on the real estate market, especially for housing supply.
Carlos Serrano, chief economist of the financial group, highlighted that such measures, far from solving the affordability problem, could reduce investment in rental housing and make both rents and the purchase of real estate more expensive.
“When it is known that rents may be capped, what can happen is that there is less investment in housing for rent and that in the end will end up making housing more expensive both for rent and for purchase,” he stated at a press conference within the framework of the presentation of the ‘Real Estate Situation’ report.
Read: An Infonavit builder does not solve the low housing affordability: BBVA México
The manager said that cities such as New York, in the United States, and Barcelona, in Spain, have shown that rent regulation ends up limiting the supply of housing, since owners have no incentives to continue investing in rental properties.
Vertical homes, a more effective policy
Serrano maintained that a more effective policy would be to encourage the construction of new vertical homes, especially in areas of high demand, although he recognized the lack of construction permits as a limitation, which impacts this supply.
“What there is not are the permits (…) cities of this size, cities of the world, are much more vertical. So we believe that erecting buildings would be much more effective in attacking affordability than putting in place rent controls,” he assured.
Does not improve affordability
BBVA Mexico economist, Marissa González, explained that although the increase in listings of homes available in the Mexican capital for rent for short stays are highly related to the increase in demand for real estate, “there is no evidence of a causal relationship. direct.”
Furthermore, he maintained that the increase in housing demand is not only related to platform services such as Airbnb but also to other demographic and economic phenomena.
He explained that the homes listed on this type of platforms only represent 0.56% of the housing stock in Mexico City, so “regulating them to increase affordability will have no impact.”
Read: The restriction to 50% of the nights to accommodate tourists is unjustified and anti-competitive: Airbnb
According to data from BBVA México, homes for short-term rentals increased 50% in the last four years, while the average price for one night has increased 93.8% in this period to $83.
With information from EFE
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