More housing won't lower prices if population keeps growing

Building more housing won't lower prices if population keeps growing, according to a forum user

This argument is uncomfortable and defies common sense: if houses are built in abundance, prices won't drop. That is the thesis opening the debate, discussed with more passion than data. The reasoning isn't that supply doesn't matter, but that any new supply is neutralized if the population flow needing shelter grows at the same or faster rate. Housing stops being a brick problem and becomes a question of how many people enter through the door.

The starting point of the analysis is that Spain's economic model for the last two decades has relied on population growth: more people, more consumption, more contributors, more construction. With housing prices where they are, this engine was seizing up or at least slowing down significantly. The discussion, therefore, isn't whether housing is needed, but what happens if we build without touching the other variable.

What happens if we build a lot and people keep arriving

The prevailing answer is that prices don't yield. It is argued that there is a huge contingent of people abroad willing to come to Europe, and as long as the door remains open, any increase in supply is absorbed without pushing prices down. The figure cited at the start of the debate is 480 million people in South America interested in settling in Europe. This isn't a projection of actual arrivals, but the size of the reservoir feeding the flow.

From this stems the most uncomfortable conclusion: asking for more housing without limits might accelerate the destruction of the social model rather than fixing it. Not because building is bad, but because building without controlling entry is like expanding the dining room of a house where more people keep entering through the window.

The supply and demand argument, put to the test

The classic objection appears quickly: if there is more supply, prices drop. That is the ABC of any manual. The problem is that this ABC assumes a bounded demand, and here it is argued that demand isn't bounded by the domestic market but by the willingness to emigrate from half a continent. Under these conditions, new supply doesn't compete with existing demand; it competes with future demand that hasn't arrived yet.

Some take the argument to the extreme, noting that construction has been practically halted in Spain for nearly two decades while the population grew, and prices have only risen. This data alone proves nothing: supply can fall and prices rise for other reasons. But it does dismantle the simplistic version that just putting up cranes fixes everything.

The rental business and family wealth

Here appears the argument almost no one wants to put in writing: the majority of Spanish families' wealth is in bricks, not stocks or funds. If prices dropped sharply, these households would be poorer in accounting terms. And the bulk of the rental stock is in the hands of individuals, not large holders, so a drop in rents would hit them directly. In other words, there is a diffuse, widespread interest in prices not falling.

This doesn't make housing a problem-free good, but it explains why no administration has moved decisively in any direction. It affects owners, tenants, developers, and voters alike. Any serious measure angers someone with voting power.

Building, yes, but with a filter: the proposal gaining ground

Against the "let's not build to avoid attracting," an intermediate formula emerges: build affordable housing for young people and local workers, close borders, and manage entry. The idea is that the problem isn't cement, but the combination of uncontrolled cement and migration. It is argued that if we build for one hundred and two hundred people arrive in the same period, the imbalance worsens; if we build for one hundred and let in ninety, the system breathes.

The other leg of this proposal is legal, not urban: security for the owner, contracts that are honored, and less tolerance for squatting. With clear rules, it is argued, withheld supply would emerge, and prices would drop on their own. It is the least interventionist version of the issue, and yet the one requiring political decisions no one wants to sign.

The physical limit almost no one mentions

There is a factor that slips into the conversation and usually remains out of headlines: electricity. Building, building, and building presupposes sufficient electrical supply to connect all that new demand, and there are reasonable doubts that the grid can handle the pace. It is half-jokingly pointed out that the next step will be not investing in the grid so nothing else can be connected. The joke has a serious core: the bottleneck may end up not being in the soil, but in the cable.

What is truly decided

The issue isn't about cranes. It's about how much population a territory can absorb without housing access becoming an inherited privilege. If we build without touching entry, prices hold; if we close entry without building, the problem becomes chronic for those already here. The most reasonable prediction, given how this has moved so far, is that neither will be done with the necessary intensity, and the adjustment will come via exhaustion: fewer births, more pressure on those arriving, and an increasingly old housing stock. No one has yet presented a plan that balances both variables at once.