The Bank of Spain has issued a stark warning: the already-critical imbalance between housing supply and demand in the country is likely to grow worse in the years ahead unless urgent measures are taken. Citing its 2024 and 2025 annual reports, the institution paints a troubling picture for the future of affordable housing—especially in key economic hubs like Madrid, Barcelona, and Málaga.
Housing shortfall nearing half a million homes
According to the Bank of Spain, Spain faced a shortfall of between 400,000 and 450,000 homes between 2022 and 2024—a slight improvement from the estimated 600,000 home deficit in 2023. However, this still represents a significant supply gap. The shortage is most evident in the five provinces with the strongest economic pull: Madrid, Barcelona, Valencia, Alicante, and Málaga, where both population and property demand continue to surge.
“This issue affects all branches of public administration—local, regional, and national,” said José Luis Escrivá, the Bank’s governor, during a speech at the Menéndez Pelayo International University in Santander. “We must act now to boost housing supply through coordinated policy efforts.”
Demand outpacing supply
The Bank highlights that the current dynamics—fuelled by strong demand, limited building, and improving financing conditions—are pushing prices up. In 2024 alone, over 700,000 home sales were recorded in Spain, according to the institution, with second-hand homes comprising 90% of these transactions. Sales grew by 12%, a pace that supply simply hasn’t kept up with.
“The greater the gap between demand and supply, the greater the upward pressure on prices, and the more the structural deficit deepens,” notes the report.
Rental market strain continues
On the rental side, the pressure is no less intense. Between 2015 and 2023, average real rental prices in Spain rose by 12.5%. In many large cities and tourist areas, the financial burden of renting now eats up between 25% and 30% of household gross income—well above the affordability benchmark recommended by most housing economists.
The Bank of Spain proposes a multi-pronged approach to alleviate the crisis. Among its recommendations:
- Establishing a stable and predictable regulatory framework for rental housing to enhance legal certainty for landlords.
- Introducing public insurance and income compensation schemes to protect landlords renting at affordable levels.
- Cutting red tape in land development and building approvals.
- Promoting industrialised construction techniques to accelerate delivery and reduce costs.
- Expanding public-private partnerships to grow the affordable rental stock.
- Complementing housing policy with enhanced public transport infrastructure and income-boosting reforms for low-income households.
Political coordination key to progress
The Bank’s call echoes growing concern among the wider public—particularly in urban areas—about the escalating cost and inaccessibility of housing. However, responsibilities are fragmented across different layers of government, often leading to sluggish or inconsistent implementation. Without effective collaboration and decisive action, Escrivá warned, the housing crisis will only intensify.
While the housing shortage is not unique to Spain, it is becoming one of its most pressing economic and social challenges. What remains to be seen is whether national and local governments can translate recommendations into impactful reforms before a growing number of Spanish households are priced out of the property ladder for good.
