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Some 200,000 homes need to be built a year in Spain in order to meet current demand, new data shows.
There has been a significant mismatch between supply and demand in Spain since 2021, according to a study by research organisation Funcas. The supply of new housing (around 100,000 homes per year) is insufficient, as around 250,000 new homes are built each year, resulting in a tightening of the market that causes prices to go up and restricts people from gaining access to housing such as young people and vulnerable groups. For this reason, Funcas is calling for measures to incentivise supply.
Aniceto Zaragoza and Ramón Ibáñez pointed out the mismatch between supply and demand is also influenced by a lack of suitable space for vacant homes that could be put onto the market, their state of conservation, which would require a major refurbishment, and a very significant and growing demand for housing as a second home, of at least 60,000 homes per year. The authors of the study said at least 100,000 additional new homes per year should have been built in recent years, a figure that could rise to 150,000.
Without a significant increase in new housing construction, affordability will continue to deteriorate, particularly affecting young people and middle and low-income households. Given the expected growth of the Spanish population and, in particular, the creation of new households in the next five years, the need for new housing will still be very high, between 175,000 and 200,000 per year. From 2032 onwards, the needs would gradually relax to a figure similar to the current one, around 100,000, in 2037, according to the study.
While recognising that public-private partnerships, together with effective urban planning, will be essential to ensure equitable access to housing, the study also warned that public interventions, if not carefully designed and implemented, can distort the market, discourage private investment and fail to achieve the expected goals of affordability and accessibility.
The study's coordinator, Santiago Carbó, said that "the combination of effective management of land for development, the construction and rehabilitation of affordable housing, the proper regulation of the rental market and the development of sustainable financing policies would contribute to a more balanced and fairer housing market".
One of the key aspects in the imbalance of the housing market is buildable land. Patricia Sánchez and Raymond Torres pointed out that, although Spain is the second largest country in the European Union and one of the least dense in terms of population, the lack of available land for building is one of the main problems. Administrative obstacles contribute to this situation. Another stumbling block is the transfer of land initially earmarked for social housing to investment in free housing.
The approval of the draft land law would reduce legal uncertainty and allow the development of new housing construction, they pointed out. Labour shortages in the construction sector are also of concern as they can slow down the building of new homes.
The rental market also needs particular attention. According to the study, the rental market must seek a balance that protects tenants without discouraging landlords. The creation of a stable regulated market can encourage investment, thereby increasing the supply of affordable rental housing.
Spain's national federation of real estate associations (FAI) wants to extend the guarantees of the official credit institute (ICO) to the rental market to provide security to small landlords in the face of non-payment of rent and the current delay in judicial eviction processes. The FAI believes that the implementation of an express public guarantee for rentals would provide coverage and security to both landlords and tenants, complementing or replacing existing rental policies. It also pointed out that it would reduce the risk of non-payment, encourage more landlords and prevent more landlords from fleeing to other forms of renting or withdrawing properties to rent.
FAI president José María Alfaro said this measure should be complemented with others such as the generation of supply through the creation of a line of aid for the refurbishing homes that are intended for long-term rental housing, regulatory changes and tax incentives and bonuses. The supply of long-term rentals has fallen by 37.2% while demand has increased by 20%, according to data from this organisation.
"The evident imbalance between supply and demand for permanent housing has caused an unprecedented tension in the last 40 years, with a gradual withdrawal of supply and an increase in rental prices three to four times higher than inflation in the last five years," Alfaro said.
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