Renters, mortgagors and landowners. Social composition and the political economy of urban land supply in Spain

Source abstract

This article examines how land supply is affected by differing resident interests in urban development. The Spanish housing bubble (1999–2007) offers a relevant context for this study. With the massive influx of credit into the housing sector, it is likely that these conflicting interests intensified, influencing local planning decisions. Drawing on the homevoter and growth machine hypotheses, we explore how resident composition (from renters in urban areas to landowners in rural ones) affects land supply dynamics, with particular focus on mortgagors who predominantly moved into suburban areas during this period. As significant investors in housing, mortgagors are likely more concerned with land planning decisions that might affect their primary investment. Using data from the Spanish housing bubble period, we show that mortgaged housing is negatively associated with land supply expansion, while the percentage of landowners correlates positively with increased land availability. The electoral effects of these land supply decisions vary: a 10% increase in mortgaged housing decreases the incumbent party’s vote share by 0.76 percentage points, whereas a 10% increase in landowners results in a 0.12 percentage point increase in the vote share. Furthermore, municipalities with higher proportions of mortgaged housing and greater increases in property values tend to experience more negative electoral consequences from land supply expansion, whereas areas with a larger amount of landowners and lower increases in property value show the opposite trend.