Spain needs 761,000 new affordable rental homes over the next 10 years. The Spanish government and private sector must focus on affordable housing and its construction to solve the problem of housing accessibility in Spain.
A report by property developers Culmia and GAd2 says that nationally, 761,000 new affordable rental housing units would be needed over the next 10 years to meet demand. There is also a need to reduce current market prices and the percentage of income households spend on rents. This is now averaging 40%. It also highlighted the communities that would need a greater number of affordable homes. Catalonia stands out with 225,000 and Madrid with 174,000 units over the next 10 years to meet the strong demand.
Required investment
The projected investment for these new measures is €108 billion (€142,000 per home). 76% should come from private investment and only 24% from the public sector. In detail, a total of €81.500 billion would correspond to private investment. Of this, €18.5 billion would come from bids and €63 billion from bank investments. Public investment would come to €26.6 billion, divided between construction aid and financing subsidies.
Housing needs by region
Catalonia, Madrid, Andalucia and Valencia are the regions that need the most affordable housing, albeit with different investments. The Catalonia region needs to build 225,000 affordable rental homes over the next 10 years. Consequently, this will require a public investment of over a billion euros. The latest update on the price of the modules means that the investment is lower than that of the Madrid region, despite the fact that more housing is needed. According to the report, the Madrid region needs 174,000 new affordable rental homes over the next 10 years, with a public investment of over €5.4 billion.
Andalucia needs 85,000 rental homes with an investment of €4.5 billion. This is followed by the Valencia region with 85,000 homes and over €3.2 billion. Finally, the Canary Islands follow with 46,000 homes and some €2.5 billion.
Clear policy needed
‘Clear and efficient policies are needed in Spain to develop, in public-private partnership, an affordable housing stock that can meet immediate and future demand. We are faced with the challenge of structuring a model to become one of the main solutions for the housing market and to make this possible through well-articulated procurement, good urban management and attractive financing,’ says Francisco Pérez, CEO of Culmia.
Low production and rising demand
In a context where housing production in Spain is down 86% from its historic peak in 2006 (80,000 homes are built per year), the national market is at the bottom of Europe in terms of public housing construction. Spain ranks number one in the entire Union when it comes to the smallest housing stock. Of the total housing production, only 10% is subsidised housing. And of this percentage, most (80%) comes exclusively from private investment.
In Spain, 150,000 new homes are expected to be built per year in the most densely populated municipalities. Therefore, if the current housing construction trend continues, a shortfall of 20,000 affordable homes per year will remain.
Vulnerable households
Households with salaries between €1,000 and €2,000 are currently the most vulnerable, sometimes spending more than 50% on housing. Precisely this group (41% of households that rent) are the main target group of this new affordable rental offer. Culmia’s report also analyses housing needs and options for population groups with incomes of less than €1,000 and with incomes of more than €3,000. For the first group, the report calculates that it will be necessary to create 442,000 housing units entirely for public rental (social housing) and for the second group a support plan aimed at facilitating the jump to the purchase and sale market through entry guarantees or tax breaks, which would cover 486,000 units over the next 10 years.
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