Spain is short of 800,000 homes — and more than half are missing in and around the cities of Madrid, Barcelona and Valencia, where house prices keep rising and access to housing gets harder.
Spain has built too few homes for too long, and the bill is now painfully clear. A new report by UVE Valoraciones estimates a national housing shortfall of around 800,000 homes, driven by years of population growth outpacing construction. Crucially, this is not a nationwide problem spread evenly across the map. More than half of the deficit is concentrated around Madrid, Barcelona and Valencia, where demand has surged but supply has failed to keep up.
According to the report, functional urban areas — meaning cities plus their surrounding commuter belts — account for 450,232 missing homes. Madrid tops the list with a deficit of 203,743 dwellings, followed by Barcelona (148,297) and Valencia (98,192). These figures reflect where jobs, services and infrastructure are concentrated, and where people continue to move despite rising costs.
Beyond the big three, shortages persist but on a smaller scale. Mallorca needs nearly 39,000 homes, Murcia 35,377, and Málaga 29,316. Even smaller tourist centres such as Elche and Benidorm show notable gaps. In total, housing deficits are identified in 19 provinces, with 17 classified as significant.
Why prices keep rising
This imbalance between supply and demand is now the dominant driver of house price inflation. Using data from the National Statistics Institute and the Ministry of Housing, UVE estimates that prices rose by 12 to 13% year-on-year in 2025, with no meaningful correction expected in 2026. While growth may slow, a fall in prices looks unlikely as long as shortages persist.
UVE’s president, Germán Pérez Barrios, argues that Spain is not facing a repeat of the 2008 housing bubble. Unlike the credit-fuelled boom of the early 2000s, today’s market is characterised by cash-rich buyers and investors, many purchasing to rent in response to sharply rising rents. Strip it back, he says, and the explanation is simple: rents are rising because homes are scarce.
The construction bottleneck
The uncomfortable truth is that Spain is not building nearly enough. UVE estimates that 250,000 new homes per year are needed just to stop pressure on prices increasing. In reality, annual housing starts barely exceed 100,000.
Even in the areas with the greatest shortages, building activity falls short. Over the past year, 18,634 homes were started in the Community of Madrid and 11,867 in the province of Barcelona. Of the eight provinces responsible for 56% of all housing starts nationwide, only Seville and Murcia are building at anything close to what demand requires.
Lengthy planning processes, slow licensing, limited construction capacity and a lack of long-term investment certainty all constrain supply. Unless those frictions are tackled — and quickly — Spain’s housing crisis will remain concentrated where it hurts most: its largest cities and most economically dynamic regions.
