Spain’s housing crisis takes center stage ahead of snap election

Spain's snap election will revolve around an issue which has topped voters' list of concerns for three years straight but, until a fortnight ago, failed to dominate the political debate: housing. It was the attempted eviction of 87-year-old Maricarmen Abascal in central Madrid last month after her building was bought by a real estate firm that upended the country's politics. Her case triggered nationwide protests and catapulted the issue to the top of the agenda, even ⁠overshadowing immigration which had dominated headlines for weeks following a mass migrant crossing in Ceuta.

Spain's housing shortage shares patterns with others across Europe: complex bureaucracy and labour shortages stalling supply, proliferating short-term rentals and high demand in urban centres pushing up prices, and rural areas hollowing out. From Ireland's 2024 election to Berlin's recent mayoral race, the topic has particularly galvanised young voters across the region tired of spending a rising proportion of their incomes on rent.

Yet how to resolve the crisis in Spain is a matter of bitter debate.

Housing plans proposed by Prime Minister Pedro Sanchez's Socialist government in Parliament last Friday were struck down by rightwing MPs who argued the measures – ranging from rent caps to limits on purchasing real estate for corporate entities – would worsen the problem by choking supply.

Alberto Nunez Feijoo, the leader of the centre-right opposition People's Party, is pledging ⁠instead to build 250,000 new homes a year in projects creating 600,000 more jobs. "If Spaniards give me their trust, my priority, my success, will be housing policy," said Feijoo, whose party leads voting intention in September polls with around 33% support to the Socialist PSOE's 26%.

Feijoo also wants to speed up urban planning to free up land for development and provide stronger mortgage and rental guarantees for young people. But some are sceptical about his promises. Marta, a 28-year-old Madrid resident and one of tens of thousands of protesters who took to the streets to voice discontent at the decree being struck down, hopes a successful election will strengthen the left's mandate to fix the issue. "If we leave this issue in the hands of the right, it's going to get much worse," she said.

Spain's regionalised structure often stands in the way. Central governments can set housing legislation and devise nationwide plans for incentives and subsidies, but their implementation, and wider urban planning, is largely devolved to regional governments and municipalities.

All types of instruments – from rent controls proposed by the Socialists to eased planning permissions proposed by conservatives – have been struck down, blocked, or simply not implemented since the Socialists took power in 2018. Two decades on from a housing bubble and subsequent market collapse that scarred its economy, Spain's has flipped from a housing glut to a major deficit, estimated by its central bank at 750,000 homes and likely to reach a million by 2028.

A steady recovery in ⁠demand, boosted by ultra-low interest rates and rising immigration, was not matched by new supply in the areas needing it most, as developers and lenders scarred by the crisis and lacking workers were loath to resume building.

Though 73 per cent of Spaniards own their homes, over half of 18-34 year olds now live with their parents or depend on them for living costs. House prices rose at three times the rate of wages last year, official statistics show, pushing more people to rent. At just 1.7 per cent by European Commission calculations, its social housing stock is among the lowest in the EU.

"Maricarmen was the tip of the iceberg. This situation has gone on forever, and all parties, the government and the regions, are to blame for passing the buck," said 40-year-old Alex Dominguez, a Madrid native living with his ex-girlfriend Marta because neither has found an affordable alternative since their breakup.

The Tenants' Union driving protests has called for a crackdown on "vulture funds", corporate investors it said were driving up prices and forcing evictions. The union has successfully intervened in several cases where properties were bought by institutional investors, negotiating compensation or preventing evictions like Maricarmen's.

But Jorge Galindo, director of the Centre for Economic Policy EsadeEcPol, argued that aggressive government action against private investors would chill construction projects.

"The (government) decrees create a tradeoff between protecting those ⁠already in rent and facilitating supply for those who haven't yet found a place to live," Galindo said. Land registry data also shows institutional ownership outside densely populated cities like Madrid is minimal. Just 4.4 per cent of homes nationwide are owned by companies and 4.3 per cent of landlords have 11 or more properties on the market, an amount that subjects them to stricter regulations.

Some 40 per cent of homes for rent belong to individual landlords with just one property on the market who supplement wages with rental income, according to the Bank of ⁠Spain. Political analyst Cristina Monge said that meant successful government policies had to balance the interests of homeowners who make up three-quarters of the populace and renters, a smaller but growing and more vulnerable group.

Victoria Waldersee, Reuters