Why is Spain facing a housing crisis? | Explained

The story so far:

Last month, 87-year-old María del Carmen Abascal was evicted from her home of over seven decades. Her father first rented Abascal’s apartment in Madrid’s upscale Retiro neighbourhood in 1956. She stayed there under rent control after her parents died. The building changed ownership in 2018, and Abascal was offered the option to buy the unit. Since she couldn’t afford it, investment fund Urbagestión bought the unit and raised the rent from 500 euros to 2,650 euros. The fund then lowered the rent to 1,650 euros, but Abascal, who was living on pension funds, still could not afford it.

How severe is Spain’s housing crisis?

Her eviction sparked tens of thousands of people to protest nationwide over a housing crisis that is crippling the European nation. Hundreds of people set up tents in Madrid’s Puerta del Sol plaza, with some camping out there for over a week. They are demanding stronger protections for tenants, lower rents and a ban on investment funds buying property. Protesters say the problem is one of supply and demand — there simply are not enough affordable homes. Rental costs have risen by an average of 84% over the last 10 years, according to property outlet Idealista. The southern city of Malaga has seen an increase of 113%, while Marbella’s increase was just under 150%. Average incomes in recent years have failed to keep up with rising costs. According to the National Statistics Institute, the average gross monthly salary in Spain is around 2,460 euros. According to Idealista, in September, a 50-square-metre apartment in Madrid cost about 1,170 euros a month — about half the average income.

The Bank of Spain’s latest reports also estimate that the country has a housing shortfall of about 7,50,000 homes. The bank’s deputy governor, Soledad Núñez, said the housing deficit could increase by another 3,00,000 homes between 2026 and 2028, crossing the one-million mark.

Why is this happening?

Three key issues are worsening the crisis. First, household construction has not been able to keep up with Spain’s demographic boom. About 1.2 million new households came about between 2021 and 2025, driven by an increase in migration. But that same period saw fewer than half a million new homes being constructed. The 2009 Eurozone crisis, which followed the 2008 Global Financial Crisis, caused Spain’s construction industry to shrink. The COVID-19 pandemic pushed up material costs, and political differences continued to restrict construction initiatives.

Tourism is worsening the problem, as more houses are being used as short-term rentals. Madrid’s tenants’ union, Sindicato de Inquilinas de Madrid, estimates that over 4 million homes and 400,000 vacation rentals are currently empty.

Spain’s Ministry for Consumer Rights ordered the short-term rental platform Airbnb to remove about 66,000 unlicensed listings, but locals say it isn’t enough. Limited public housing is also worsening the situation, forcing many young adults to leave their parents’ homes only after turning 30 — far older than in other European countries. Spain ranks towards the bottom among countries in the Organisation for Economic Co-operation and Development in terms of government-owned rental properties, which account for less than 2% of the total housing stock. Madrid has only around 10,000 public housing units for its 3.5 million residents.

Investment funds are further exploiting the problem by buying whatever homes and units are available and hiking rents dramatically. Prime Minister Pedro Sánchez’s government calls them “vulture funds”.

How has the crisis shaken Sánchez’s government?

As protests continue to swell, Sánchez presented two emergency measures to tackle the housing crisis, largely aimed at providing tenants with more protections. On October 1, Spain’s Congress rejected both proposed decrees, prompting further protests. The defeat showed that Sánchez’s socialist government does not have congressional backing. Following the blow, Sánchez called for a snap general election on November 29. The next general election was meant to be held before the end of next summer. Sánchez is hoping to capitalise on public anger over the housing crisis to win votes and maintain his position. His Spanish Socialist Workers’ Party is up against the far-right Vox party, the conservative People’s Party and the pro-independence Catalan party Junts. If Vox wins, it would be the first time a far-right party has governed Spain since the death of dictator Francisco Franco in 1975.