Politicians are targeting demand when they should be boosting supply, according to a new report that argues the country’s housing shortage is fundamentally self-inflicted.

Funcas, One of Spain’s leading economic think tanks has delivered a stinging criticism of the country’s housing policies, arguing that politicians are misdiagnosing the housing crisis and making it worse as a result.

In a new report, Funcas argues that Spain’s housing problem is fundamentally one of inadequate supply, not excessive demand. For more than a decade, the country has built fewer homes than needed to accommodate new households, creating a structural shortage that is now estimated at around 750,000 homes.

A shortage of homes, not too much demand

According to the report, this persistent gap between supply and demand explains why house prices and rents have continued to rise despite repeated government intervention. The authors warn that many politically popular measures, such as rent controls, buyer subsidies and tax incentives, may provide short-term relief for some groups but ultimately reduce supply and make housing even less affordable over time.

The report also takes aim at the search for political scapegoats. Blaming foreign buyers, institutional investors, second-home owners, developers or short-term rental platforms may be politically attractive, it argues, but does little to address the underlying problem. When housing supply cannot respond, strong demand simply translates into higher prices.

Funcas also rejects comparisons with the 2008 property crash. The risks facing Spain today are very different. Rather than a credit-fuelled construction bubble, the country faces a long-term shortage of homes that threatens labour mobility, productivity, household formation and affordability. The report argues that the greatest danger is allowing this shortage to become the new normal.

The think tank also notes that Spain’s banking sector is in a much stronger position than it was before the financial crisis, with far less exposure to risky property lending, making a repeat of the banking collapse far less likely.

None of these conclusions will surprise regular readers of Spanish Property Insight. Time and again, evidence from Spain and abroad has shown that restricting housing supply while attacking demand leads to fewer homes, higher prices and worsening affordability. The latest Funcas report is another reminder that if policymakers want more affordable housing, they first need to make it much easier to build it.