The housing problem in Spain

As everyone knows, housing is one of the main problems in Spain. The high cost of real estate, limited supply, and the difficulty of financing the purchase are some of the elements that make the problem increase day by day.

The context of the housing problem

Understanding the housing crisis requires analyzing a complex scenario that transcends social issues to become a structural economic challenge. It is not a temporary phenomenon, but a persistent deficiency in the quantity and quality of the available housing stock.

It is important to highlight that this challenge is not exclusive to Spain; it is a multifactorial global issue that prevents nearly half of the world’s population from owning a home. Therefore, its analysis requires a technical vision that considers all the sectors involved.

Supply, demand, and price

These three elements are the engines that mark the current housing crisis. In Spain, there is a structural deficit where the number of households (or living units) significantly exceeds the available properties. This lack of stock generates double pressure:

In purchasing: As there is more demand than supply and a construction rate that has continuously decreased while demographics grow, prices remain very high. Faced with a basic necessity, many people are forced to pay prices above market value to secure a home, which feeds back into the constant rise.
In rentals: The shortage also triggers rents to skyrocket, especially in urban and tourist areas. This fierce competition among tenants drives up prices, undermining the saving capacity needed to leap into ownership.

To this is added the obsolescence of the housing stock. Due to the general deficit, older homes maintain prices similar to those of new ones, despite not meeting current standards of sustainability or energy efficiency.

The demographic composition of present-day Spain

As in the rest of Europe, the Spanish population is undergoing a process of aging. However, this phenomenon is compensated for by migratory flows and the demand from young people seeking to access their first home, which widens the gap between the available supply and the living units that need it. A determining factor in the current market is the concentration of new construction in the luxury segment. Due to the higher profitability offered by these developments, construction has been oriented towards a public with high purchasing power, leaving aside affordable housing. This disparity between price, supply, and demand is notably exacerbated in large cities and in areas with greater tourism pressure.

Social housing and financing barriers

The complexity of the problem means that solutions must be found regarding the value of the property and the possibility of obtaining a mortgage for the purchase.

One option that significantly helps to reduce the scale of the problem is the construction of subsidized housing, which has lower construction costs and is aimed at people with lower incomes. However, Spain has a shortage of this type of housing.

Financing is also a challenge, as lower-income individuals face significant difficulties accessing mortgages to purchase homes. Furthermore, loans typically only cover up to 80% of the lower of the purchase price or the appraisal value —known internationally as the Loan-to-Value (LTV) ratio— requiring the buyers to pay the remaining balance from their savings, which leaves many people unable to buy a home.

Towards a comprehensive and strategic solution

Given the structural nature of the problem, no simplistic or immediate solutions exist through a single decree. The current legal framework, defined by Law 12/2023 on the Right to Housing, has introduced mechanisms such as “Stressed Residential Market Zones” to limit rents. However, price regulation or isolated construction are not enough if they are not accompanied by an environment of legal certainty and economic stability that allows the construction sector to operate. To reduce the gap between supply and demand, a comprehensive approach is essential, including:

The decisive promotion of public and social housing.
A balanced regulation of tourist housing and speculation.
The collaboration with financial entities to facilitate access to credit.

In a market where the disparity between supply and demand continues to strain prices, having expert advice is vital. At Firmalex, we transform these challenges into secure opportunities through our technical and legal experience. If you are looking for a management tailored to your needs and with full guarantees, our team is at your disposal to guide you every step of the way.

Further information

This article is part of our service Real Estate Lawyer in Spain. Visit this section where you will find all the useful information on this topic, including a complete guide on How to buy a house in Spain.

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