Spain | Housing shortage: When supply does not accompany demand

Summary

The Spanish real estate market is entering a phase of forced maturity. Sales are slowing, not because there is a lack of buyers, but because of limited supply. The paradox is obvious: The economy is growing, employment remains strong and credit is flowing, but buying a home is becoming increasingly difficult.

Key points

• Key points:
• The problem is not circumstantial. For some time now, Spain has been building less than it needs. New households far outnumber completed homes, and new construction is progressing slowly.
• The factors that support demand remain firm. Employment is rising, wages are regaining purchasing power and mortgage rates have stabilized at relatively low levels.
• One of the issues is the shortage of available housing. The market could be exhausting the remaining amount of second-hand housing that remained unsold, after the halt caused by the rise in rates in 2023 and the increase in supply resulting from the new Housing Law.
• Public policies have not managed to reverse the trend so far. The increase in the budget of the new Housing Plan is a step in the right direction, although it will still be lower than the European average (0.4% vs 0.7% of GDP).
• Forecasts suggest that this situation will continue in the coming years unless policies change. According to BBVA Research's Real Estate Observatory, home sales will remain practically stable in 2025 and 2026, at around 725,000 units per year.

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