The housing crisis in Spain has not only created a situation of inequality and precariousness that hits the middle and lower classes particularly hard, but may also castrate the country’s economic recovery, becoming a drag on GDP growth.

The cost of housing, both owned and rented, remains sky-high. According to data from the Bank of Spain, during 2023, Spanish households spent on average 39.2% of their income to meet the cost of housing, 15% more than in 2022, and need 7 and a half years of gross salary to purchase a home, the greatest effort recorded since the end of 2011.

The Association of Registrars notes that the price of housing has increased by 2.9% in the second quarter of the year compared to the first, accelerating its rate of increase, which had increased by 0.8% between January and March. The average price has now exceeded 2,000 euros per square metre, standing at 2,057 euros, compared to 1,998 euros in the previous quarter.

In terms of the ability of young people aged between 16 and 29 to emancipate themselves, Spain is still at the bottom of the list of advanced economies. Only 16.3% of young Spaniards are emancipated, far from the European Union average of 31.9%, and they have to spend 92.1% of their salary on housing, as shown in the latest report on the Balance Sheet of the Youth Emancipation Observatory, which regularly monitors young people’s options for accessing the labour market and the housing market.

The weak point of the economic recovery

The housing crisis not only affects the individual, but also has socio-economic repercussions at the collective level. Rising prices cut the disposable income of families, contributing to the expulsion of the middle and lower classes from urban centres to the peripheries, while at the same time reducing aggregate consumption in the economy and limiting growth.

The Economic and Social Council (CES) warned about this a few weeks ago in its Report on the economic and employment situation in Spain: ‘The extreme shortage of social and affordable rental housing in Spain, in addition to being a major social problem that limits the emancipation of young people, the creation of households and the increase in the birth rate, can become a bottleneck that strangles growth’.

President Sánchez’s government recognises the issue and wants to make it a prominent issue of his legislature, ‘in a context of such dynamic and balanced economic growth we have to prevent housing from becoming a bottleneck’, he said in early August. Meanwhile, his counterpart in Catalonia, Salvador Isla, has pledged to make progress in this area in exchange for being invested.

Some economists are concerned that this shortage in housing supply, exacerbated by labour shortages and an expected increase in demand over the next few years, will make the problem even worse, becoming a drag on economic growth.

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