NEED TO KNOW
Wanted: a Home – Spain Is Becoming a Victim of Its Own Success
SPAIN
In early April, tens of thousands of people took to the streets in demonstrations across Spain, angry over the high price of housing.
From Madrid to Malaga to the Balearic Islands, Spaniards said they were angry because they can’t afford to buy or rent homes anymore. Many young and well-paid professionals now, they added, are forced to live with their parents or share apartments – and are still broke.
“I’m living with four people and I still allocate 30 or 40 percent of my salary to rent,” Mari Sánchez, 26, a lawyer in the capital of Madrid, told the Associated Press. “That doesn’t allow me to save. That doesn’t allow me to do anything. That’s my current situation, one many young people are living through.”
In Spain, the average rent has almost doubled in the past 10 years, due to the country’s history of real estate speculation, and the lack of new affordable housing, Euronews reported. From September 2023 to September 2024 alone, rent increased 16 percent in Madrid, and 29 percent in the central Spanish city of Cáceres, a World Heritage Site.
It’s a similar increase for property.
Homeownership, meanwhile, among Spaniards under 35 has fallen dramatically over the past 14 years. In 2011, 70 percent of that demographic group owned their own home. Today, around one-third do.
The problem is particularly acute in areas that attract large numbers of tourists, such as Barcelona or the Canary Islands.
In some of these areas, as in Barcelona or Ibiza in the Balearic Islands, rental prices can often exceed 100 percent of the median salary, the news outlet added.
Some say the country is becoming a victim of its own success.
“A dozen years ago, Spain was a byword for economic failure,” wrote the Economist. “The country’s government and banks appeared to be locked in a death spiral and depended on bailouts, young people were leaving the country or protesting their lack of opportunities. Homes lay half-built and airports abandoned, relics of a burst construction bubble. How that has changed.”
Last year, Spain was the best-performing economy of the developed world, based on five indicators – GDP, stock-market performance, core inflation, unemployment, and government deficits – compared with 37 countries, the magazine noted. “Both overall economic growth and the pace of job creation are running faster than in America, which has been the envy of the rich world.”
Analysts say that Spain is benefiting from reforms it made after the financial crisis more than a decade ago, when it reformed its banking sector, imposed fiscal discipline, loosened its labor market, and worked to close the digitalization gap.
What also helped is lower energy costs than in many other developed economies in Europe, investment from China and elsewhere, a growing labor pool, also thanks to immigration, and retuning its economy to diversify, and to focus on high value-added sectors such as technology, financial services, renewable energies, engineering, biotech, and consulting.
As a result, Spain is now the eurozone’s fourth-biggest economy, its fastest-growing, and responsible for 40 percent of its growth last year. It is the “envy” of Europe, the BBC noted.
“Madrid has attracted strong international attention over the last two years due to its incredible post-COVID economic streak,” IARI, an Italian think tank, wrote. “Whereas most of Europe’s economies struggled with soft growth and lingering uncertainties, Spain’s turnaround consistently outperformed the rest of (the European Union) countries’ performance…It became one of the EU’s main growth drivers… Spain’s capacity to maintain this trend …will irreversibly define its geopolitical standing and solidify its place within the European Union as well as the global order.
However, it is the booming tourism sector – 93.8 million visitors last year and the second most-visited country after France in the world – and the attractiveness of Spain to immigrants as well as investors that are also putting pressure on the availability of homes and pricing.
Immigrants to Spain have increased the population by 1.5 million over the past three years to 48.9 million. About 70 percent of immigrants hail from Latin America and are competing for the same affordable housing that Spain’s own citizens are hunting for. At the same time, Spain’s unemployment rate – 12 percent, high by European standards – as well as real wage stagnation and the higher growth of lower-paid service sector employment mean that many can’t afford to rent or buy anymore.
Protesters, who have been demonstrating for two years against the housing issue but also overtourism, also blame international hedge funds for buying up properties to sell or rent to tourists.
As a result, Spain has instituted a 100 percent tax on all non-EU residents who buy homes in the country. At the same time, cities such as Barcelona are phasing out thousands of permits for short-term rentals on platforms such as Airbnb by 2028.
The government has also implemented a rental price cap.
Analysts and protesters, however, say all this is too little, too late.
Meanwhile, some of the pressure for housing is actually driving out businesses, noted William Chislett of the Elcano Royal Institute, a Spanish think tank, detailing how thousands of small shops and bars in neighborhoods across Spanish cities are now being converted into apartments for tourists, or the occasional resident.
One, a bakery called Feni, which was founded in 1945, was near the writer’s home in Barrio Salamanca, Madrid. It closed last year to become a home.
While residents lamented the loss of the bakery and other neighborhood businesses, saying it is changing the character and conveniences of their district, new residents were thrilled to finally have a place to stay.
Analysts say there is no stopping this trend for now, in spite of the anger over it.
“(Owners) can make more money renting them out as housing rather than as a bakery,” Alejandro Tamayo, professor of urban planning at the Polytechnic University of Madrid, told Spanish newspaper El Mundo. “Whoever converts the premises doesn’t think about the needs of the community or the neighbors, but rather their own economic interest. It’s a problem.”
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