Spain’s property crisis is often blamed on factors such as the lack of affordable public housing and the proliferation of tourist apartments, but there are many other points involved which are also contributing to spiralling prices.
Both housing and rental costs have been rising dramatically in Spain over the past few years, leading to a severe housing crisis.
Many people are unable to access affordable housing, while others are forced to spend almost half or more of their monthly salary on rent.
And prices continue to rise dramatically, whilst wages remain basically stagnant, meaning every month housing becomes more and more unaffordable.
Advertisement
According to property website Fotocasa, property purchasing prices are rising 17 percent year-on-year. In fact in the last five years alone, there has been a 40 percent increase in the cost of an average home here.
But it’s not just mass tourism, rich foreign buyers and the rise of Airbnb-style homes that are to blame for this housing emergency as many headlines would have us think, there are many other factors involved.
READ ALSO – €190K to €370K: Property prices in Spain’s Valencia double in six years
The pandemic
The Covid-19 pandemic has a lot to answer for, and while being locked in our houses and wearing masks may be distant memory, the mark it has left on the housing market can still very much be seen. The pandemic forced everyone to think about the way they live and re-evaluate what they were looking for in a property. People wanted more space, bigger rooms, more light, larger balconies, terraces and gardens. Every little bit of outdoor space counted. This led to a surge in buying and selling activity, and according to Fotocasa, this hasn’t let up and they’re still seeing 60,000 sales per month.
READ ALSO: How much does a property in Spain cost on average in 2025?
Increase in single-person households
There has been a dramatic rise in the number of single-person households in Spain. Previously it was common for several generations to live under the same roof, but as Spaniards are waiting longer and longer to get married, not having kids or preferring to remain single, there’s a demand for properties for just one person. In fact, last year over 5 million out of Spain’s 48.6 million inhabitants lived alone, according to data from Spain’s National Statistics Institute (INE). This is a record high.
The number of divorces has also been rising in Spain. According to the INE, divorces increased by 8.2 percent in 2024 compared to the previous year, and the number of separations by 6.6 percent. This all leads to a greater demand on the housing market, as more properties are need for the same amount of people.
Advertisement
Increase in foreigners
The number of immigrants and foreigners in Spain has risen dramatically over the past few years, fuelling an even greater demand for housing. The population of Spain has hit a record high thanks to growing numbers of immigrants. INE figures show that the number of foreigners increased by 95,277 during the second quarter of 2025, reaching 7,050,174 in total. Catalonia for example is home to over 2 million foreign-born residents, slightly more than 25 percent of its population. A bigger population needs more housing. According to La Caixa Bank Research between 2021 and 2024, a deficit of up to 750,000 homes accumulated in Spain.
READ ALSO: Why are so many different types of foreigners moving to Spain?
Pressure to be on the property ladder
The crisis has put even more pressure on young people to try and get on the property ladder. Everyone feels like they must buy soon before property prices rise even further and mortgage rates get worse again. This pressure again means that more and more people are looking to buy – and with a bigger population and severe deficit as seen above, not everyone can do this, even if they can afford it.
And can these people be blamed? As María Matos, Director of Studies and Spokesperson for Fotocasa says: “Anyone who buys now is almost certainly saving themselves a double-digit price increase next year.”
READ ALSO: What’s the state of the Spanish property market this autumn?
Change in rental laws
In order to help ease the property crisis, the Spanish government has brought in several in laws over the past few years. While some of them have helped, some experts believe others they have made the situation worse. They claim that the laws have been so pro-tenant and put so much protection in place for them, that renting out properties becomes a legal minefield for landlords. Many are too scared to rent worried about tenants defaulting on payments. They are now so many laws on how long they can rent properties out for, who to and what documents they need from tenants that many simply prefer to sell their extra property rather than keeping it on the rental market. While this is good for buyers’ market, it’s very bad for the rental market as more and more properties are being taken off.
READ ALSO: Why landlords in Spain leave their flats empty rather than rent long-term
Advertisement
Property Transfer Tax
Some experts believe that the Property Transfer Tax or ITP is also adding to the problem and preventing many from accessing the housing market. They say that it should be eliminated. ITP varies between regions but is seven percent of the purchase price in Andalusia, 8 to 13 percent in the Balearic Islands and around 10 percent in Valencia and Catalonia. According to a Financial Times report, titled Home economics: the tax roulette of buying a house in Europe, Spain has the highest average rate of property transfer tax among ten European countries studied including the UK, France, Italy, Greece and Portugal.
Lack of construction and social housing
There hasn’t been nearly enough construction of new properties in Spain to meet growing demand and cover the deficit. María Matos, Director of Research and Spokesperson for Fotocasa explains that previously, around 60,000 social housing units were built each year and today, there are barely over 10,000, that is, six times less public housing than before, with a 4 percent larger population. Although construction is increasing, she believes that it’s not nearly enough. “At Fotocasa, we estimate that we need 1.8 million homes, both for purchase and rental, to respond to the housing crisis”, she said.
READ MORE: ‘Red tape takes longer than building homes in Spain’
