While authorities continue to deny the existence of a new housing bubble, a sobering study from three renowned economists suggests otherwise.
According to ‘El clásico’ of housing: bubbles in Madrid and Barcelona’s real estate market—a joint academic investigation by Marta Gómez Puig (University of Barcelona), Simón Sosvilla-Rivero (Complutense University of Madrid), and Adrián Fernández Pérez (University College Dublin)—Spain’s two most prominent cities are heading headfirst into dangerous housing territory.
Their conclusion? Since 2023, Madrid and Barcelona have been experiencing a new and accelerating property bubble, driven less by owner-occupiers and more by speculative investors, foreign capital, tourism-fuelled demand and severe supply bottlenecks.
When rents stall but sale prices soar
According to the researchers, a tell-tale sign of a speculative bubble is when housing prices shoot up disproportionately compared to rental prices—suggesting that purchases are being made in anticipation of future resale profits rather than for own-use or rental yield.
In Barcelona in particular, the team identified three distinct bubble phases: mid-2015 to early 2016, mid-2016 to late 2017, and again since August 2023. In all three periods, housing prices decoupled sharply from rent levels.
This overheating, they argue, points to an unhealthy concentration of speculative investment. “We’re seeing more and more buyers acquiring homes not to live in them, but to flip them or convert them into high-yield holiday or seasonal rentals,” the study explains.
Tourists and transience: too much demand, too little supply
A key driver of the current imbalance, the study notes, is international migration and short-term tourism. Explosive demand, especially in the rental sector, hasn’t been matched by equivalent growth in construction—public or private. That has fuelled steep price hikes and shut growing segments of the population out of the market entirely.
The Catalan housing rights group Sindicat de Llogateres backs the study’s conclusions and goes further. “We’re seeing working families compete directly with hedge funds and investment firms,” says spokesperson Enric Aragonès. “More than 60% of home purchases now happen without a mortgage, and over half of Barcelona’s recent transactions involve owners with eight or more properties.”
Regulate speculation, expand public housing
To rein in the crisis, Aragonès and his group are demanding an aggressive clampdown on speculative buying in high-pressure areas. Among their proposals:
- Ban predatory investment purchases in overstressed housing zones;
- Expand public and protected rental housing (Catalonia currently has just under 2% public stock, short of the 15% target for 2027);
- Strengthen and extend rent controls—especially to seasonal and room rentals;
- Close legal loopholes allowing residential housing to be diverted into corporate “coliving” or short-term lettings.
Recent events in Barcelona highlight these concerns. Residents of six residential blocks have publicly accused real estate investment firm Vandor of mass evictions in order to convert homes into coliving spaces. Activists are calling on the Spanish government to urgently legislate to prevent similar loopholes from being exploited elsewhere.
A rental-first approach
The authors of ‘El clásico’ argue that the best way to prevent further overheating is not through ownership schemes or price freezes, but by prioritising robust, affordable public rental programmes. “Social rental housing serves as a ballast against speculative shocks,” they explain.
Additionally, they encourage regional and central governments to invest in improving infrastructure and transport links in less congested areas to reduce pressure on urban hotspots. More balanced territorial development, they argue, will help stem the conditions that allow property bubbles to flourish.
Bubble-and-bust déjà vu?
For anyone who endured the painful collapse of Spain’s 2008 housing market, the warning signs today sound remarkably familiar: soaring prices, declining affordability, stagnant incomes and a growing divide between speculative buying and people simply looking for a home.
The difference this time? Investors aren’t always relying on cheap credit—they’re deploying cash. And rental loopholes, rather than subprime loans, are fuelling demand distortions.
But the end result could be the same: entire cities transformed into unaffordable shells that exist more for investor return than residential need.
Unless policy begins to match reality—and fast—the term “housing bubble” may move from taboo back to mainstream in Spain’s biggest cities.
