Housing Crisis in Spain: Expats and Locals Face Rising Costs and Regulatory Challenges

As the Spanish real estate market continues to grapple with soaring prices and a severe shortage of affordable housing, expats and local residents are finding themselves in an increasingly difficult situation. A recent focus on the region of Cantabria and the broader national context highlights the complexities and challenges facing the housing market.

Rising Rental and Purchase Prices

The year 2024 saw a significant increase in housing prices across Spain, with the average monthly rent per leased square meter reaching a new record of 13.5 euros[2]. This trend is particularly pronounced in tourist hotspots and major cities. For instance, the Balearic Islands, which include popular expat destinations like Palma, have seen property prices exceed those of the pre-financial crisis era, with current prices 16.9% higher than in 2007[4].

In Cantabria, while the region's GDP growth is forecasted to be 2.0% for 2025, the housing market remains under pressure. The region, though not as heavily impacted by tourism as some other areas, still faces challenges in balancing supply and demand. The average price of second-hand housing in Cantabria increased by 8% in 2024, contributing to the broader national trend of rising housing costs[5].

Regulatory Efforts and Urban Planning

In response to the housing crisis, local and regional authorities are taking steps to regulate the market. In Marbella, a city known for its high tourist influx, the City Council has initiated a study in collaboration with the University of Málaga to assess the tourist housing market. This study aims to provide a detailed overview of the current situation and inform the new General Urban Development Plan. The goal is to balance tourist and residential use within the city, addressing the issue of many homes being used for vacation rentals rather than long-term housing[1].

Experts like Susana Gómez, Dean of the College of Architects of Málaga, emphasize that outdated urban planning and the shift of housing from a basic necessity to a financial asset have exacerbated the problem. Gómez argues that current urban plans, many of which were created over 20 years ago, need urgent updates to facilitate the construction of more homes and address the imbalance between supply and demand[1].

Public Response and Demonstrations

The pressure on the housing market has led to public demonstrations, particularly in regions like Málaga, where thousands have called for effective regulation of the tourist housing market. Protesters demand measures to ensure that tourist rentals do not dominate the market, further limiting access to long-term housing for local residents[1].

Economic and Social Impact

The Bank of Spain estimates that Spain will need approximately 600,000 additional homes by 2025 to balance supply and demand. The rise in vacation rentals, which now account for about 10% of the rental market, has significantly contributed to the shortage of long-term rental options. This has driven up purchase and rental prices, making it increasingly difficult for many, including expats, to find affordable housing[1].

In regions like the Balearic Islands, households are dedicating a substantial portion of their disposable income to mortgage payments, with an average of 67% of income going towards first-home mortgages. This highlights the financial strain that the current housing market is imposing on residents[4].

Future Outlook

As Spain navigates this complex housing landscape, it is clear that a multifaceted approach is necessary. Regulatory measures, updated urban planning, and initiatives to increase housing supply are all critical components. For expats and locals alike, the hope is that these efforts will lead to a more balanced and affordable housing market in the near future.

In the meantime, the ongoing studies and regulatory discussions, such as those in Marbella, offer a glimmer of hope that the unique challenges of each region will be addressed. However, until significant changes are implemented, the housing crisis in Spain is likely to continue, affecting the lives of many who call this country home.