Spain's social housing vs Europe: what Housing Europe 2025 shows and why VPO stopped being built

Every European housing debate eventually asks the same question about Spain: where is the social housing? Housing Europe, the federation of public, cooperative and social housing providers, publishes a country-by-country report, The State of Housing in Europe, and its 2025 edition answers with a number. Public social rental housing in Spain comes to about 318,000 homes, 1.7% of a stock of 18.5 million, based on the 2021 census and estimates from AVS, the association of public housing developers. The report adds the Government's broader estimate: protected housing of all kinds, including homes built for sale, is around 3.4% of the stock, and public housing about 1.7%.

Set that against Europe. The OECD's Affordable Housing Database puts social rental housing at 8% of the stock on average in the EU and 7% across the OECD, largest in Austria, Denmark and the Netherlands and smallest in countries such as Portugal and Spain, below 2%. Housing Europe's Austrian profile puts social housing there at 23.5% of the stock.

This matters for one of the problems raised in Democracia 21's launch speech: regulation that pushes up the cost per square metre until social housing no longer pays to build. The figures bear the diagnosis out.

Built to be sold

Spain did build a lot of protected housing once. Its model was different. Housing Europe notes that social housing in Spain, mainly through the VPO programme, historically prioritised affordable purchase over long-term rental. A protected flat was sold to a family at a capped price and, after a period, could return to the open market. The country spent public money and kept little stock.

The 2023 Housing Law tried to change that. Article 16 of Ley 12/2023 set rules for protected housing to stay protected, with a minimum of 30 years in exceptional cases. The Constitutional Court struck that article down in May 2024 (judgment 79/2024), so the national rule is gone. The law's land reserve for protected housing survives: 40% of residential floor area in new urbanisation and 20% in urban renewal, written into the state Land Law.

Why nobody builds it now

Final approvals of protected homes, the calificaciones definitivas counted by the Housing Ministry, fell 22.7% in 2025 to 11,104, from 14,371 in 2024, as Forbes reported in March 2026. Private developers produced 63.6% of them. That second number is the key. Most protected housing in Spain is built by private firms, at a maximum price set by the region, so it gets built only when that price covers the cost.

For years it hasn't. Fernando Cos-Gayón, who directs the Housing Observatory at the Universitat Politècnica de València, published a report in 2026 on exactly this. Construction costs, measured by the Valencian building cost index, rose 57% between 2019 and 2026. Meanwhile the regulated price per square metre in the Valencian Community was frozen at €1,212.80 from 2013 until June 2023. His conclusion is arithmetic: no developer can build when the cost is above the maximum price at which it can sell.

Housing Europe also counts the human side. Between 180,000 and 250,000 households are on waiting lists for social housing in Spain, with waits of up to five years in big cities. Public spending on housing is under 0.4% of GDP, below the EU average. It cites a Bank of Spain estimate that 1.2 million new homes will be needed by 2030, 800,000 of them affordable and 400,000 social. Its recommendation for Spain is a national investment framework that guarantees continuous funding for construction, renovation and management.

What Austria does

Austria shows a third way to run this, outside both the state landlord and the market developer. Housing Europe's profile splits Austria's 23.5% social housing into 6.8% owned by municipalities and 16.7% owned by limited-profit housing associations. These are private bodies, cooperatives and companies, whose returns are capped and whose surpluses go back into housing. They normally build 15,000 to 16,000 homes a year; in 2024 they completed 14,000, and with higher building and financing costs the report expects completions to fall to 11,000 or 12,000, a multi-decade low. Even the best model needs its numbers to add up.

The radical-centre answer

The left is right that Spain needs a large, permanent stock of social and affordable rental housing with steady public money behind it; 1.7% is far too little for a country with these rents. The market-liberal tradition is right that a regulated price below cost produces nothing, and that private builders, who already deliver most protected housing, respond to prices. The idea that fits neither camp is the Austrian institution: limited-profit builders, private in form and public in purpose, whose capped returns and reinvested surpluses make a stock that grows every year and stays affordable.

Put together, that means four things. Index the regulated price to an official construction-cost index, updated automatically every year, so nobody has to wait a decade for a decree. Keep new protected homes protected for good, through regional law now that the national rule has fallen. Create a legal status for limited-profit housing associations, with tax advantages tied to capped returns and reinvestment, and give them access to the land reserves the law already sets aside. And fund them steadily, which is where the European plan's new state-aid category and Democracia 21's proposed housing fund would fit. The aim is a social stock that adds, year after year, the way Austria's does.