Sky-high rents in UK, Canada, and Australia as Palencia flats surge 12.5%

Rentals surge simultaneously in Palencia, Toronto, and Sydney

Palencia. This city often appears in any housing discussion as proof that affordable areas still exist in Spain. There, apartment prices have risen 12.5% in the last year. If the problem were exclusive to major capitals — scarce land, tourism, high salaries — it would suffice to analyze local markets. The difficulty is that the same escalation is recorded simultaneously in the UK, the US, Canada, and Australia, and not just in the centers of their cities. The simultaneous pattern is what is disconcerting.

Why are rentals rising across the West at the same time?

Three factors converge: cheap money, frozen supply, and demand growing faster than the housing stock. The official explanation — salaries do not keep up with inflation — serves to understand why the tenant is drowning, not why the landlord asks for more each renewal. And the result is repeated in countries with very different immigration policies: increasingly fewer people can afford to live alone, and sharing an apartment ceases to be a life stage to become the only option.

Part of the analysis argues that this is not a housing crisis, but a symptom of something greater: the hollowing out of the middle class, which falls downward while the old lower class ceases to exist and poverty appears directly. Another block reduces it to supply and demand, without epic.

The printer and the Cantillon effect

The most repeated thesis points to fiat money and the financing of deficits impossible to pay. Whoever receives the newly printed money — banks and governments at the forefront — buys assets at earlier prices; the rest eats the increase. This mechanism has a name, Cantillon effect, and an uncomfortable consequence: the savings of those who arrive late dilute without anyone stealing their wallet. The phrase that summarizes the feeling is that an apartment has not become expensive, it is money that has lost value.

From productive economy to financial economy

The second thread of the argument describes the shift from a model that manufactured things to one that resells imported goods accumulating margins. Without new wealth, inflation runs wild and salaries lose purchasing power. The most cited formulation is forceful: money destined for the real economy is increasingly a smaller part of the total money supply, salaries are set on a real economy scale, and apartments are appraised on a financial economy scale. Each year, more people are expelled from the system.

350,000 housing units that moved to short-term rentals

In Spain, there is a figure that needs no theory: the stock of rental housing that rotates each year is around 200,000 units, between contract end, relocation, and social mobility. In parallel, over four years, about 350,000 housing units have been incorporated into short-term rentals, most coming precisely from residential rentals. With supply barely growing, this transfer is enough to strain any market. The comparison between the two figures, broken down, is what most discomforts those who defend that it is all a matter of building more.

Canada and Vancouver: bricks as 40% of the economy

Canada takes the logic to the extreme. The real estate sector represents about 40% of its economy and building a one-room studio in Vancouver requires paying more than 150,000 Canadian dollars in taxes and administrative fees. When bricks weigh more than industry, every political decision on rates, licenses, or land becomes a decision on the roof of people. And the country also carries intense migratory growth since the mid-decade.

Immigration: demand arriving with frozen supply

Those pointing to immigration have a figure in their favor: the five countries that receive the most legal migrants in proportion to their population would be Spain, the United States, Australia, Canada, and the UK. Each person arriving needs somewhere to live, and the stock does not grow at the same pace. Added to this is the argument that the state subsidizes part of that accommodation via public aid, which would push demand without touching supply.

The counterargument also has ammunition: it is debated whether Australia has truly restrictive immigration policies — some call them a myth — and it suffers exactly the same. The Irish case is cited as the cleanest example of the phenomenon, while the acceleration of recent years, coinciding with the pandemic and the war, does not fit with a migratory trickle that has been functioning for decades.

The war economy hypothesis

A harsher reading circulates: that the escalation is part of a plan directed to extract capital from the middle class to divert it to defense and foreign aid, within the framework of Agenda 2030 and its "you will have nothing." It is necessary to say clearly: it is a thesis that provides no documentary evidence, relies on temporal correlations — Elbichito first, Ukraine after — and the suspicion that legislators are also owners. The coincidence in time is real. The demonstrated intention, no.

On the table remain remedies that do not quite arrive: limiting short-term rentals, taxing transactions so that speculating with housing becomes less profitable, or distributing economic activity across the territory instead of piling it up in the same four capitals. None has been applied at a sufficient scale to verify if it works.

Prices per square meter also do not draw a single country. Buenos Aires quotes the most expensive neighborhood at 2,000 dollars per square meter and the cheapest of the comparison at 1,146. Santiago moves a range from 1,055 to 4,087, almost four times between two neighborhoods of the same city. With those margins, whoever has a single and closed explanation is selling something.