According to the Banco de España, there is a shortage of 600,000 homes in Spain, despite a vacancy of almost four million homes. How is that possible?
The housing shortage in Spain is especially noticeable in metropolitan areas such as Madrid, Barcelona, Valencia, Málaga and Alicante. The Spanish Bank blames this largely on a lack of land to build on in the areas where the shortage is greatest.
Why a housing shortage?
The main reasons for the housing shortage are rising construction costs, the shortage of qualified workers, and the aging of the construction sector. In addition, there is a lack of investment for the purchase and development of new urban land.
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Rental properties
Demand for rental housing has increased, especially among young people and immigrants. These groups account for a significant portion of the rental market, especially in cities where rents are the highest.
The report states that since 2007, the number of rental properties in Spain has increased by 1.3 million units. The regions with the highest percentage of rental properties in 2023 are Madrid (23.7%), Catalonia (24.9%), the Canary Islands (28.5%) and the Balearic Islands (30.9%). The Spanish average is 18.7%. Prices have increased by 28.5% between 2015 and 2022.
Private individuals make up 92% of the owners of rental properties on the market, compared to 8% of private legal entities. Furthermore, properties rented by private owners owning more than 10 real estate units represent an estimated maximum of 7% of the total rental housing supply on the market.
Purchase of properties in Spain by foreigners
Residential sales to foreigners surpassed 19% in 2022, reaching an all-time high of 134,000 sales. Although these figures decreased in 2023, they still represent 19.3% of the total. That is significantly higher than the 7.1% in 2007. These purchases mainly take place in tourist areas, driven by the high demand for second homes by non-residents. However, the report highlights that most purchases by foreigners are made by those who are residents and have recently participated in the Spanish economy.
Impact of tourist rentals
The Banco de España report also highlights the impact of seasonal and holiday rentals. This type of rental has increased exponentially in recent years, especially in the above-mentioned areas with the greatest shortage. Seasonal and holiday rentals now account for almost 10% of the rental market. This has led to a reduction in the supply of permanent rental properties.
The 4 million vacant or uninhabited homes in Spain are largely located in areas with less geographic dynamics. In cities with more than 250,000 inhabitants, there are about 400,000 empty homes. A significant part of it is in poor condition. In addition, approximately 450,000 homes belong to the stock of unsold new homes.
Political measures necessary
The report emphasises the need for political intervention to improve access to housing. Furthermore, it warns of the negative consequences of limiting rental prices without structurally increasing supply. In addition, it is recommended to revise the housing tax.
Finally, cooperation between public and private sectors must be promoted to stabilise the housing market. This can be done, among other things, by promoting rentals, encouraging the renovation and transfer of housing, strengthening legal certainty and regulatory clarity, improving the management of administrative processes related to land and urban planning policies, and improving public transportation in metropolitan areas.
