Spain heads for an unprecedented housing crisis

Raymundo Larraín Nesbitt, December, 15. 2025

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By Raymundo Larraín Nesbitt
Lawyer – Abogado
16^th of December 2025

Spain heads for an unprecedented housing crisis induced by the ruling administration.

Despite repeated warnings from experts, from all sides of the political spectrum, which have gone unheeded by the Spanish government, as predicted, property and rental prices continue escalating, having surpassed the maximums of the 2008 property bubble. According to the latest figures, property prices have increased 12.8% over the last year.

The governments' continued market interventionism, both in the housing and rental markets, has stifled offer, strangling it. As a result of an induced housing and rental shortage, prices are spiralling out of control nationwide.

Whilst this may sound good at first glance, because everyone feels richer on paper, it’s actually very bad news.

A moderate growth in house prices (3 to 5%) is almost always the desired goal. A sharp rise of two digits year-on-year is causing serious issues. The vulnerable collectives this administration allegedly vowed to protect, by passing draconian rental laws such as Spain's Housing Act, are the first ones to be excluded from the market by the soaring increase in house and rental prices. But what's even more concerning is that large parts of Spain's middle class are also being priced out, which is unprecedented, and takes the housing problem to a whole new level. In effect, as a result of these misguided housing policies, we are witnessing a destruction of the middle class, which can only lead to political instability in the future. The dramatic increase in house prices is also giving wings to the squatter movement, which is at historic record levels.

On top of this, a new phenomenon is taking place, which is the emergence of shanty towns overnight that sprout like mushrooms all over Spain and are associated with a rise in crime. They trap young children, often unschooled, in a poverty and criminal spiral. The unbridled rise of shanty towns and mobile caravan parks is the biggest red flag, showing something is seriously wrong with the government’s housing policy. And when you think the government would stop dead on its tracks and realise the shortcomings of its failed housing policy, they actually double down on it, enacting new laws which further compound and exacerbate existing problems and even create new ones! It beggars belief.

I don’t want to go into detail, but the gist of the matter is that under 100,000 properties are being built every year when the actual need is well over 500,000 units a year. If to this, you add an open immigration policy which welcomes everyone - both legal and illegal - we are brewing a perfect storm. To put this into perspective, in 2015 Spain’s population was 46 million people. Now, in 2025, a decade later, we have almost 50 million people. That’s a 9% increase in under 10 years. Despite all this, the government has openly admitted it wants 3.5 million more immigrants by 2030.

The government is adding fuel to an ongoing dumpster fire by allowing millions of people to come freely into Spain, almost unchecked, whilst building a (very) low amount of housing units a year (mostly out of ideological reasons). Consequently, if few homes are built, and simultaneously there is a massive population influx in a short span of time, rental and housing prices will boom following the laws of demand and supply. It’s basic economics.

The Spanish government has irresponsibly chosen to plough ahead and disregard the fundamentals of how Economics works, and as a result, both the native population, and all new immigrants, will suffer over the next years and pay the price for its blind ideological hubris.

Maths, cornerstone of Economics, doesn’t understand about ideologies.

“Two things are infinite: the universe and human stupidity; and I’m not sure about the universe.” – Albert Einstein

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