This is not just a problem in Spain. Affordable housing is a problem in almost every Western metro, both in the US and in Europe. The problem is caused by the financialization of real estate.
I know it's always been a bit of a financial asset, but the past 40 years have really seen this accelerate to pretty crazy levels. The issue, when you boil it down to the basics is: wealthy folks, development companies, overseas oligarchs, hedge funds, etc. owning many properties where they try to extract as much value as possible. This means that rents go up and short-term-rentals become more viable. This also means that young middle-class families can't afford to purchase or to live there, so it pushes out locals (this is especially bad in Lisbon).
The solution seems to be government telling you what you can or you can't do with your private property, which does not sit well with me, but it's becoming more and more clear that this can't go on forever.
That is not the issue. The issue is supply. People keep blocking construction of new housing and so prices go up and therefore it becomes an investments. increase the supply and it would no longer be an investment and you could not charge high rents
This is a very "Econ 101" way of looking at the problem. If you've ever been to Paris, Amsterdam, Lisbon, London, Barcelona, you quickly realize you can't "build more," as the desirable city locations are saturated.
The problem is that the supply/demand curves are being manipulated by, as mentioned, property owners which are destroying the fabric of their respective city via short-term rentals (or, by just owning an appreciating empty property), which, in turn, increases rents and prices for housing en masse. All of a sudden, a "boring" property becomes an investment that generates revenue. All of a sudden, hedge funds, banks, etc. want in on the action. There's money to be made, after all!
While this used to be the case in the past (if you bought, for example, farmland, or a factory, or something), the financialization of housing is a relatively new phenomenon.
Expats and global financial markets further complicate this: how can an average Spaniard that makes $50k compete with a California "digital nomad" that makes $150k? Obviously, we need to have some sensible rules that protect the citizens with heritage and history there.
I like what Singapore is doing - having a government built “base level” of housing that is both abundant and readily available - it can anchor the price where deep excesses are harder to end up with.
It’s like a market where a very significant player keeps the price law, because of its own reasons.
In such a scenario the price will not go up as sharply, so there would be less incentive for people to buy real estate just as a financial vehicle.
And the government can also prioritise who it sells the units it builds to - e.g. not investors.
I honestly am surprised why western governments are not trying this.
Yes - in the UK we had a strong social housing sector, with award winning architecture (and some terrible mistakes too).
Then along came 'right-to-buy', allowing tenants to buy their social housing for knock down prices (and so become a natural Tory [right of centre party] voter).
If councils had been allowed to use the money to build more social housing, then maybe this was fine. But they were not. So now we have affordability issues in the UK too.
Taxes, too. At the end of 2024 I had ~€200k or so saved up and was renting, so I got hit with box 3 tax. Now in 2025 that money is in my house which I just bought, and taxes are close to nothing. So my incentive is for house prices to go up.
Also, are you aware your personal site has a malicious captcha? It looks like cloudflare but has instructions to press windows-R and paste the auto-copied text which runs a malicious msi.
I was surprised since you are such a prolific commentator. Almost fell for it. Hope it’s not social engineering.
Almost everywhere the issues with housing boil down to 1) location constitute a large part of the value and desirability, 2) substitutability between houses in different locations is limited, 3) the most desirable locations will have the strongest opposition from local residents to increase supply.
More supply is crucial but efforts to reduce demand in the mean time probably won't hurt either. If tourists can stay in hotels and hostels that take up less housing that seems good?
But you still need to build more housing obviously
I don't think dramatically, because the issue right now is that residential housing can be used for short-term commercial accomodation. It feels like the connection between these supply & demand curves is limited.
It's not that more houses are needed, its that more houses are needed at specific location and the people in that specific location don't like the idea of demolishing houses and make them taller or turn a city park into housing.
There are so many empty and decaying homes all over Europe, in Italy they sell houses for 1 Euro. Yes there's a catch but that catch is that you are supposed to renovate the house for a cost that ranges from 20K euros to 100K euros and this is still quite cheap considering that you end up with a proper house at a picturesque location.
The problem is people don't "just" want cheap housing - they want the character of the area to remain the same. But, those two things are frequently incompatible.
Also, some places physically cannot grow outwards anymore, either because other cities are in the way or because of geographical elements like mountains being in the way. Barcelona is one such city, with one of the highest population density per km2. Only way is to build taller buildings, but no one wants to live in a city where you can't see the sky (ya ya, except Hong Kong and other places, don't ask me how they do it).
Yes, I know, I was there again very recently and it's still mostly as nice as I remembered, lovely city all around and fascinating buildings, infrastructure and overall city :) It's quite different than other metropolitan cities, and I didn't mean it as a jab or anything, was just trying to "paint a picture", no offense meant :)
I’d argue it’s not as simple as that. A city like Lisbon with a sudden influx of expats risks moving to a very unhealthy economic environment.
Expats come, locals are pushed out, existing business is replaced by business catering towards expats. But an economy built on being a trendy expat location is not sustainable. Expats will leave to a new place eventually, and then the city is dead. This dynamic is accelerated by the fact that locals are forced out when expacts come, but the city was attractive in the first place because of how charming locals made it.
If you run the city - and imagine it’s a company, and you’re the CEO - you can see that your city is falling for a hype train that will eventually kill it. The smart thing is to not let that hype train happen.
Because expat purchase power is a mutliple of your locals, you need to find other levers. Every company would do the same thing.
I know it's always been a bit of a financial asset, but the past 40 years have really seen this accelerate to pretty crazy levels. The issue, when you boil it down to the basics is: wealthy folks, development companies, overseas oligarchs, hedge funds, etc. owning many properties where they try to extract as much value as possible. This means that rents go up and short-term-rentals become more viable. This also means that young middle-class families can't afford to purchase or to live there, so it pushes out locals (this is especially bad in Lisbon).
The solution seems to be government telling you what you can or you can't do with your private property, which does not sit well with me, but it's becoming more and more clear that this can't go on forever.