MADRID – Over the past twenty years, home ownership among Spaniards under the age of 35 has fallen dramatically. It fell from 70% to 36% among young people.
This decline is highlighted in the report ‘Household Finances 2000 – 2022’, prepared by the Fundación Afi Emilio Ontiveros. The study shows how the financial situation of Spanish households has changed significantly due to economic crises and other global phenomena, as well as social and demographic developments.
Less savings, greater generation gap
Spanish households save less and their income is lower than that of other Europeans, while their accumulated wealth is “relatively” higher than that of neighbouring countries. This is mainly due to the revaluation of real estate, the favourite way of saving in Spain. Home ownership is mainly concentrated among older households.
Fewer young people are buying homes
According to the research, the younger generation has halved the purchase of homes. The decline in income of young people is significant and they have difficulty gaining access to the housing market. The situation of younger generations contrasts with that of older people over 65, who have seen their real wealth grow thanks to the revaluation of real estate. By 2020, no household had reached 2001 income levels, except those over the age of 65.
This younger generation has entered the labour market in a period of economic uncertainty, characterised by flexible working conditions, rising rents and multiple crises. Young people who become independent now receive less income than those who became independent at the turn of the century. Therefore, they cannot afford their own home.
Shift to rental properties
Although Spain has traditionally had a strong preference for ownership over renting, there has recently been a clear shift towards rental properties, especially among the young. In 2020, 20% of households were occupied in rental properties, a doubling of previous years, although this is still lower than in many other European countries. Young people’s lower job stability and their greater geographic mobility are some of the factors explaining this change in trend.
Wealth and saving behaviour
Spanish households have seen a significant increase in wealth in the last two decades. This is mainly due to the revaluation of real estate. This contrasts with the low savings rate of just 7.6% in 2022, compared to an EU average of 12.7%.
Also in purely financial terms, the increase in house prices relative to the purchasing power of young people, as well as the need to build up savings earlier, also act as a “clear brake on housing acquisition”, according to the report. “The number of annual salaries currently required to purchase a home is clearly higher.”
All this has caused a substantial change in the last twenty years. The weight of households without a main residence has increased from 19.3% to 26.1%. Therefore, highlighting the difficulties of new households (young or first generation) to gain access to purchase a property.
Widening generation gap
In addition to the difference in ownership, there has also been an increase in the generation gap in recent years. The age groups over 65 are the groups that have clearly improved their level of prosperity in real terms over the past twenty years. Meanwhile, young households experienced a more intense decline.
Revaluation effect of real estate
According to the research, this would be related to the revaluation effect of real estate. This is closely related to the real estate wealth built up by the older generation. Furthermore, to the deterioration in the income of young people. A higher income level, and therefore a higher savings capacity, ensures greater accumulation of wealth.
In this sense, Spain is the country where household wealth (cumulative savings) has increased the most over the twenty years as a whole (215%). This is well above the eurozone average (145%). “Three-quarters of the increase in Spanish household wealth comes from the revaluation of real estate,” the study authors explain.