Housing in Spain: we need to build, and build a lot

Since 2015, wages in Spain have gone up 28%. And housing? Buying a home costs 80% more. Renting one, 87% more. Three times the rise in wages. And this has been going on for more than ten years.

So how are we trying to fix it now? By freezing everything. Everybody stay where you are and let's share out what there is: extend the contracts, cap the prices. Mind you, that does protect the people who are already inside, for a while. But it doesn't add a single home, and it ends up making things worse. To see why, you have to go to the root.

More households than homes

In five years, from 2021 to 2025, Spain gained 1.2 million households. Young people leaving home, couples splitting up, people coming to work. And all of them need somewhere to go.

The usual path is to start by renting. Later, if you can, you buy, and when you leave you free up your flat for the next person. It's a chain. And the chain moves when there are new homes at the end of it.

Spain builds very little. In the 1990s we finished 260,000 homes a year; in the mid-2000s, more than half a million; now, about 93,000. Fewer than two per 1,000 people, among the lowest in Europe.

Do the maths: 1.2 million new households and fewer than 470,000 homes. Two and a half households for every home. Everyone else goes to the back of the queue. A queue that doesn't move.

Since there's hardly any new building, nine out of ten homes sold are second-hand: we just pass them around among ourselves. And whoever gets into a rental stays there. Look at people born between 1986 and 1995: 38% of their households rent at market prices. The generation before them, at the same age, ten points fewer. They can't get out, and more people keep arriving behind them.

Then there are the ones who never even make it into the queue. Nearly seven in ten young people aged 18 to 34 still live with their parents; across the European Union, about half. So the queue gets longer, it jams, and a lot of people end up badly housed: in a single room, sharing a flat at 40, or with nowhere at all.

Add to that some very specific problems in very specific places. In the most central neighbourhoods of Valencia, or in El Cabanyal, between one in eleven and one in eight homes is on a holiday-rental platform. In central Alicante, one in four homes is bought by someone who doesn't live in Spain. Those are people jumping the queue, and that really squeezes, in particular places. The underlying problem is still the same: there are more households than homes.

What happens if we freeze rents

OK, so what happens if, instead of making it easier to build, we freeze rents? Two things.

First, letting stops paying off and some homes leave the market. In San Francisco, landlords covered by rent control cut the number of homes they rented out by 15%. In Berlin, listings fell by half. In Stockholm, after decades of regulated rents, the queue is literal: an average wait of nine years.

And when there are fewer flats for the same queue, who gets them? The landlord holds auditions and picks the best payslip. You can already see it in Spain. In 2020, the typical renting household earned 78% of what the typical Spanish household earns; today, 82%. In Catalonia, where prices are capped, it went from 70% to 86%. The people with less get left out.

Second, we pour all our energy into the wrong goal. The question we should be asking is a different one: why isn't Spain building?

The wall

There are reasons. Credit doesn't flow like it used to. There's a shortage of workers. The bubble took thousands of firms down with it and productivity in construction has fallen. All of that weighs on it. But at these prices, building should be a fantastic business. And if almost nobody's doing it, there's something else going on.

There is: a wall. A wall we built ourselves, brick by brick. A hundred sectoral reports to approve a municipal master plan. Ten or twelve years to get it through. Administrative silence that counts as a no. Building permits that by law should take three months and are, on average, a year late. An appeal that can bring down the whole plan over a procedural flaw.

Every brick had its reason. Together, they add up to 20 years from the land to the keys. More cost, more time, more uncertainty. So of course nobody comes in.

The wall holds back subsidised housing too. In the 1990s we finished about 62,000 subsidised homes a year; now, about 12,000, five times fewer. And social rented housing is stuck at around 320,000 homes: just over 1% of the total, at the bottom of the European table.

Open the wall and build

So the first thing is to open up that wall. Review the rules from top to bottom. If the administration doesn't answer, that counts as a yes. Deadlines get met. Nobody asks for the same report twice. And one town hall can't block what its whole metropolitan area needs.

More height and more density where there's demand and there are services. Density, yes, and liveable. Plus transport to connect it, because we've slammed the brakes on that too: in 2009 Spain invested 1.7% of GDP in transport infrastructure; now it's 0.7%.

How much do we need to build? At today's pace, 95,000 homes a year, it would take 42 years to close the gap. At triple the pace, about nine. Three million homes in a decade. And then the queue really does move: whoever buys frees up a rental, whoever was waiting gets in, and whoever was still at their parents' finally leaves.

In the meantime

How do we make renting work better while those homes arrive? Three things.

One, get more homes onto the market. Right now the contract extensions put the job of protecting each tenant on their individual landlord. Let's spread that risk across everyone with public rent-default insurance. If landlords know they'll get paid, they stop holding auditions and rent to people who don't make the cut today. France already has two million tenancies guaranteed this way. Spain has had a scheme on paper since 2025, only for young people and vulnerable households, and each region has to set it up. It should cover everyone and sit at the centre of housing policy.

Two, more social housing, so that everyone has a decent place to live. And for that, public authorities have to go out and buy, as well as wait for someone to sell.

And three, where the problem is local (holiday lets, buyers who don't live here), well-aimed disincentives.

All of this is the responsibility of every level of government. It's ours too, because in the end they offer us what we ask for. So let's start by asking for what actually works.

This article is inspired by Jorge Galindo's video on Spain's housing crisis and his book Tres millones de viviendas (Three million homes).