Home » Inconclusive General Election won’t change the housing market

Inconclusive General Election won’t change the housing market

Spanish general election results july-2023
The PP and Vox parties of the right now have a combined total of 170 seats, 6 short of an absolute majority. Image credit: La Vanguardia

Last Sunday’s General Election delivered a hung parliament in Madrid that that won’t have much of an impact on the housing market in a country where regional governments decide housing policy.

Despite a thumping victory in local and regional elections in May, right-wing parties failed to win power in the General Election last Sunday. The centre-right Popular Party (PP) party won the most votes and seats in parliament, but fell far short of an overall majority, even in coalition with the Vox party further to its right.

Ironically, the result has left the key to Spain’s government in the hands of Carles Puigdemont, a Catalan nationalist currently residing in Waterloo, Belgium, wanted by the Spanish State for his part in Catalonia’s illegal referendum and unilateral declaration of independence from Spain. The Gods are mischievous indeed.

In the end, the results were a fair reflection of the Spanish electorate. Around two thirds voted for the centre-right and centre-left, 25% voted for the far-right or far-left, and the remaining 10% voted for nationalists of different ideological stripes in restive regions like Catalonia and the Basque country.

Having burnt their bridges with the regional-nationalists who hold the key to power, the PP have no hope of forming a government. Only the Socialists under the current President Pedro Sánchez have any chance of stitching together a parliamentary majority. They might not manage it on the first attempt, so a repeat General Election after the summer is highly likely. But one way or another, Pedro Sánchez will remain as president of a left-wing coalition supported by regional parties that local pundits call a ‘Frankenstein’ government. It doesn’t look like it will be an easy ride.

Housing market implications

In Spain, housing and planning policy is largely devolved to the autonomous regions, over which the government in Madrid has little say.

The rental market is a different story. Madrid set’s the legal framework for the rental market, which it did in May with a new Spanish Housing Law that favours tenants and squatters at the expense of owners and landlords. As a consequence of this law, the supply of long-term rental homes on the market in cities like Barcelona and Madrid has plunged from 80% to 20% in the space of a few months. This is a disaster for local families who cannot afford to buy, and need a place to rent long-term, but doesn’t affect foreigners buying a home or holiday-home in Spain.

The government in Madrid also influences the way Spain is perceived abroad as place to invest. It is likely that the next government will be even more dependant on small extremist parties, which might not be a great look.

The political uncertainty isn’t helpful for the economy, which ultimately influences the housing market, but the economy seems to be ticking along okay for now.

Otherwise it doesn’t really matter who wins the General Election if you own or plan to buy a home or holiday-home in Spain. The local and regional government matter more.