Introduction: With the implementation of the Housing Law a year ago, it’s time to assess its impact. The primary goal was to alter market conditions to enhance housing accessibility, particularly in rental properties. Additionally, recent announcements reveal that the ICO will guarantee between 20% and 25% of mortgages for young individuals below a certain income threshold. Although it’s premature to evaluate the achievements of the new legal framework and recent measures, the 2023 figures paint a bleak picture. Housing accessibility, both in rental and purchase sectors, hasn’t improved. Despite real estate analysts labeling years with rising property prices as positive, it’s concerning when the primary role of the housing market, which is to facilitate housing access, is neglected. Insufficient efforts are being made to address accessibility issues, especially in major cities and other high-demand areas. Without a significant increase in supply, problems will persist. Moreover, regulations aimed at controlling prices often have the opposite effect, further inflating them.
Housing Rental Market Analysis: Despite significant imbalances in the housing market, price statistics lack the depth and detail of other Western countries, and there’s no plan for necessary informational improvements. However, by leveraging various public and private sources, a somewhat useful tracking can be established. Major real estate portals like idealista.com and Fotocasa serve as primary sources of rental price evolution information. The rental market closed 2023 at record highs with minimal supply, attributed to various regulatory measures. Unless there’s a radical change in the regulatory framework and a substantial and sustained increase in supply, rents will continue to rise. Rental price growth was consistent throughout last year, with many regions reaching record highs due to an increasing demand-supply gap. Data from idealista.com suggests a 10.1% increase in rents, with Barcelona being the most expensive city for rentals (€20.5/m2), followed by Madrid (€17.9/m2). Furthermore, anecdotal evidence indicates a 42% increase in shared apartment room listings, highlighting the market’s dysfunctionality, especially for young individuals. Fotocasa reports a more moderate rental increase of 5.7% in 2023, but the overall trends remain consistent.
Housing Purchase Market Analysis: Spain continues to experience a significant rise in housing prices despite higher interest rates and a weakened macroeconomic environment. This increase is primarily driven by wholesale demand from large investors and non-residents, paying in cash for investment purposes, including speculative motives. Only 38.9% of property transactions involve mortgage financing. Although data doesn’t provide a complete explanation, factors such as a higher percentage of cash purchases in tourist and inland areas by non-residents or nationals for second homes may contribute. This trend increasingly undermines housing affordability, as property prices have outpaced wage growth for years.
Conclusion: While the Spanish real estate market may fulfill its investment destination objective, it falls short in providing reasonable access to primary housing for the majority. Long-term inadequate land policies and increased demand have exacerbated the issue, widening the gap between property owners and those unable to afford homeownership, especially younger generations. It’s imperative to prioritize housing on the political agenda and focus efforts on improving access to affordable and quality housing, promoting an efficient rental market without interventions that raise prices, and increasing both public and private supply.