It has now turned into a mockery of itself, a place where the locals have been driven out for the sake of tourism and growing capital. Combination key safes have appeared in doorways, indicating that the unit has been turned over to vacation rentals. Shops selling ceramic bulls and flamenco dolls have taken the place of a century-old apothecary and shirtmaker that once existed on La Rambla.
Cities around Spain are gradually changing due to real estate speculation and the rise in tourist apartments; exorbitant rents are forcing out locals and traditional businesses, and neighbourhood mainstays are giving way to international chains, gift stores, burger places, and nail parlours. Such startling facts explain Spain’s housing crisis.
According to recent research conducted by the Bank of Spain, nearly half of Spain’s tenants spend 40% of their income on rent and utility costs, compared to the European Union (EU) average of 27%. Rents have increased by 80% over the last ten years, exceeding salary gains.
The problem has become the main concern of Spaniards and the subject of the most recent policy dispute between the ruling socialists and their conservative opponents in the People’s Party (PP). Real estate speculation and the surge in tourist apartments have exacerbated the problem by increasing living expenses.
In a speech, Prime Minister Pedro Sánchez laid out a 12-point plan to alleviate what he described as the nation’s “housing situation emergency.” He pointed out that social housing only accounted for 2.5% of Spain’s total stock, while it made up 14% in France and 34% in the Netherlands.
“We will split European and Spanish society into two types of people,” PM Pedro Sánchez said.
One inherits one or more homes from their parents and can use most of their income for travel and education, while those who work their whole lives end up as elderly people without a home.
Before taking office in 2018, he stated that Spain had been without a state housing policy for nearly ten years. He also charged that his predecessor in the PP had gambled instead on “an ideological, neoliberal policy that had disastrous social and economic consequences.”
To build “thousands and thousands and thousands” of affordable social housing units for families and young people, Sánchez, whose coalition minority government has already introduced a law allowing authorities to cap “disproportionate” rent prices in some areas, announced the transfer of 3,300 homes and 2 million square metres of land to a newly established public company. In addition, he suggested tougher regulations and greater taxes for tourist apartments, as well as incentives for those who rent out vacant buildings at reasonable rates.
However, his proposal to impose a tax of up to 100% on real estate purchased by non-residents from non-EU nations, including the United Kingdom, was arguably his most striking move.
“Approximately in 2023 alone, non-EU citizens purchased approximately 27,000 homes and apartments in Spain. They didn’t do it to live there or to provide a place for their families to dwell. They did that in order to conjecture,” Sánchez stated recently.
Some parts of the UK press were not happy with the proposal, which would need to be presented to parliament and may be challenged in court. One newspaper denounced the “brutal tax hike,” while another referred to it as a “war on Brits’ holiday homes.”
The People’s Party declared that it would not back the government’s “xenophobic” policy in the areas it controls. The People’s Party had made its own housing proposals the day before Pedro Sánchez’s address, primarily centred on tax savings.
Sánchez claimed that his government was considering prohibiting non-EU immigrants “from buying houses in our country, in cases where neither they nor their families reside here and they are just speculating with those homes,” indicating that he was willing to go even further.
Over the last 12 months, the housing issue has become a top priority on the political agenda. Several large-scale protests throughout Spain in 2024 were sparked by worries about overtourism, which was primarily caused by its distorting impact on the property market. Marches calling for affordable housing have also taken place in Barcelona, Madrid, and other towns.
“I think that’s what it is in many ways,” said Ignasi Martí, director of the social innovation section at Esade Business School and head of its decent housing observatory, about the prime minister’s usage of the term “housing emergency.”
“People cannot access housing; the supply is lacking, and over the past few years, subpar housing conditions have become the norm,” he added.
Did the solutions come late?
All of this has primarily impacted disadvantaged socioeconomic sections until recently, but now it’s also impacting the middle class and working class, Martí remarked. People in the middle class who realise they won’t be able to afford an apartment and that renting is extremely difficult, as well as those who stay in Spain until they are roughly thirty-one years old, are more likely to be impacted politically.
Although he admits that the 100% tax on non-resident, non-EU buyers was a show-stopper, Martí believes it might be more of an ideological ploy than a practical fix.
“It won’t fix the issue,” he declared, while adding, “You can’t force that on EU buyers, and we’re talking about a relatively small amount.”
Providing tax benefits to individuals who rent out their apartments at reasonable prices is insufficient, according to Claudio Milano, a researcher in the University of Barcelona’s Department of Social Anthropology and an authority on over-tourism, given that 3.8 million dwellings, or 14% of the country’s total supply, are vacant in Spain.
“They must take a much more aggressive approach to the issue and stop people from purchasing apartments for speculation,” he stated, while noting, “That must end immediately so that we can discuss tax benefits. Before taking further action, we must extinguish the fire, which requires prohibiting speculation in apartments.”
Pablo Simón, a political scientist at Carlos III University in Madrid, said, “The question now is whether the socialists and the PP could agree on how to best address the housing crisis at a time of profound polarisation and within the constraints of Spain’s complex system of central, regional, and municipal government.”
On the positive side, he claimed that both sides agreed on the underlying analysis, which is that Spain lacks adequate housing.
“As you would expect a party on the left and a party on the right to do, one party is betting a little more on state intervention and the other is betting a bit more on the market. However, the diagnosis is fairly similar,” he added.
Spain’s two largest cities have reacted coolly to Sánchez’s ideas. The government is prioritising landlords over tenants and “betting on construction as a long-term panacea” instead of addressing the current crisis, according to the Tenants’ Union of Madrid, which called them “insufficient, misguided, and cowardly.”
Barcelona has experienced a similar reaction, with rising rents and property values driven largely by the rapid growth of tourist apartments over the past 15 years.
The plans are ambiguous and “very generic,” according to Jaume Artigues, a spokesman for the residents’ group in Barcelona’s most populated neighbourhood, the Eixample, where there is one tourist apartment for every 57 residents. Regardless of whether it was luxury apartments sold to investors or tourist apartments, he said, at least the government had acknowledged that speculation was the primary source of the housing problem.
“The need for affordable public housing has increased due to evictions, which is a result of the unaffordable housing that is currently available, rather than a rise in population. Speculation lies at the core of the problem, yet it perpetuates a vicious cycle,” he stated.
Amidst public protests and local discontent, critics argue that current measures are insufficient and too generic, underscoring the urgent need for decisive action to curb speculation and prioritise the construction of affordable social housing.
The future of Spain’s urban landscapes and the well-being of its residents hinges on whether political leaders can bridge their ideological divides and implement effective reforms before the crisis deepens further.