In other words, mortgage contracts enrolled not only personal income, but also the practices of everyday life as well as community and family relations as cogwheels into the global speculative financial strategies that drive capitalist urbanisation.
The embodied processes that enrolled millions of lives in global real-estate speculation and debt servicing practices are, we argue, central in the macroeconomic process of ‘housing financialisation’.
After the 1990s, significant institutional and macroeconomic changes at the national and international scale enabled the global expansion of speculative real-estate investment through financial markets. Combined with the liberalisation of mortgage financing, these processes became central for an unprecedented expansion of mortgaged home ownership in many countries around the world (see Table I) and gave impetus to what is now depicted by many scholars as the ‘financialisation of housing.’ As the liberalisation of mortgages was accompanied by a significant decline in welfare provision, the expansion of home ownership via mortgages contributed to the promotion of the idea of citizens not only as consumers but also as leveraged real-estate investors.
Colau and Alemany (2012) note that the [Francoist] project to produce a nation of homeowners both sidestepped potential conflict between state and tenants and acted as a disciplinary mechanism that could convert potentially insubordinate spirits into orderly home-owners/citizens. Within this spirit, the promotion of home ownership (particularly for low-income households) as a socially admirable and ‘patriotic’ way of living evolved in parallel with an ideology that depicted renting and subleasing as socially unacceptable (Maestrojuan 1997, 183; see also Ronald 2008).
The adoption of the euro (1999) and the subsequent significant decrease in interest rates (from 16% in the early 1990s to 3% in 2004) contributed further to making Spain safe and attractive for international investors. Direct foreign investment in real estate increased by 102 percent between 1998 and 2006 (Garcıa 2010), facilitating the process that enabled property titles to be traded as a financial asset (Harvey 1982) and turning land and housing into a form of fictitious capital (Christophers
2010). By 2007, 36 per cent of Spanish mortgage debt was securitised, with only the UK holding a higher percentage within the European Union at the time (Naredo et al. 2007).
Ironically, while Spanish household debt was exponentially increasing, the boom in real-estate prices produced a fictitious increase in recorded household wealth. Spanish household wealth appeared in official statistics to grow from 480 per cent of Gross Domestic Investment (GDI) in 1995 to 800 per cent of GDI in 2006 (Sanchez Martınez 2008). However, 540 per cent of the wealth recorded in 2006 corresponded to property wealth, which was calculated on the basis of inflated property values of largely mortgaged properties (Sanchez Martınez 2008).
The exponential increase of the indebtedness of Spanish households coincided with a significant decrease in wages (Table II). The dismantling of traditional industrial activity, and the gradual reorientation of the Spanish economy towards the service sector after the 1980s were accompanied by changes in labour law that enabled workforce flexibilisation and permitted an increase in temporary and precarious contracts (TAIFA 2005).