Political Uncertainty in the Behavior of Rental Housing Prices in Spain. Time Trends and Persistence Analysis

Abstract

Over time, Spain has implemented various legislative measures to address the imbalance between homeownership and rental housing in a real estate market closely linked to the country's economic conditions. Changes in governance have introduced different regulatory approaches that may have influenced rental prices. This study examines the relationship between political uncertainty and rental housing prices in Spain from 1997 to 2024, using fractional integration, fractional cointegration, and wavelet analysis. The results indicate that exogenous shocks, such as uncertainty, temporarily affect rental prices. Additionally, a one-point increase in the Economic Policy Uncertainty index correlates with a 16.4-point rise in rental prices.