Financial Independence for Young Spaniards?
August 11th, 2006
Prohibitive housing costs and inflexible financing opportunities make it increasingly difficult for young people in Spain to move out of their parents’ homes. Spanish institutions are considering unusually aggressive techniques to address the situation.
It’s getting harder and harder for young people in Spain to leave their parents behind and purchase a first home; a financial move that requires over 50 per cent of their income, according to a recent study.
This percentage peaks in Madrid, where over 70 per cent of a young person’s salary is needed to buy a home, and meets its lowest point in Extremadura at just over 30 per cent.
These dismal figures, along with an increase in housing costs of 130 per cent between 1995 and 2005, have led to proposed legislative changes that aim to facilitate the access of youth and other disempowered groups to the housing market.
Growing sales of residential and vacation homes (spurred by the continuing expansion of the Spanish market and increases in employment) along with a large influx of foreign immigrants, has led to a situation where inadequate financing conditions make it difficult for young people to purchase a home without entering into almost life-long debt. A considerable number of empty homes that cannot be re-introduced into the market also present an obstacle to those wishing to buy a first home.
The Bank of Spain has announced that more aggressive measures will have to be taken in order to solve the current situation. Giving impetus to the rental market and increasing the number of government-sponsored homes for people of limited financial means are a few of the suggested solutions.
On a larger scale, the Bank proposes implementing changes in the legal system that will allow for more speedy real estate related trials, and plans on revising aspects of Spanish law that block the entrance of empty homes into the rental market.
The Consejo de Juventud de España, a youth advocacy group with support at local and national levels, has demanded the creation of a series of public housing complexes that would require no more than 20 per cent of a person’s total income, enabling people with modest salaries to move out of their parents’ homes at an earlier age than is currently achievable.
Ultimately, organisations like the Bank of Spain and the CJE aim to make it possible for the youth in Spain to participate in the same level of financial independence enjoyed by young people in countries such as the US, where the expense of renting or buying a home and owning a vehicle is not as prohibitive.
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