This is the difference between the formation of new households and the construction of new homes. The financial pressures that led to the 2008 property crash no longer exist.»
The Bank of Spain estimates that between 2021 and 2025 there has been a shortfall of around 750,000 homes as a result of the number of new households being formed outstripping residential construction. Half of this shortfall is concentrated in six provinces: Madrid, Barcelona, Alicante, Valencia, Murcia and Málaga.
In its 2025 Annual Report, the Bank highlights that around 240,000 new homes were built last year, although the number of completed dwellings stood at around 92,000 units, which is 9 per cent less than the previous year.
The Bank of Spain warns that difficulties in accessing housing are primarily due to structural supply constraints and calls for coordinated policies across the various levels of government to increase the housing stock and facilitate access to housing.
In this regard, it notes that Spain is experiencing a phase of growth in the property market against a backdrop of economic expansion, population growth and the easing of lending conditions. All of this has led to an increase in property sales, mortgage lending and real purchase and rental prices, particularly in major cities.
Specifically, property transactions rose by 12.1 per cent in 2024 and by 5.1 per cent in 2025, although they gradually lost momentum over the course of the last financial year. The total volume exceeded 750,000 transactions in 2025, a figure comparable to the cumulative twelve-month total recorded in the first quarter of 2008. However, the Bank of Spain points out that these transactions accounted for 3.8 per cent of households, compared with the average of 5.5 per cent during the property boom from 2004 to 2007.
Risk indicators do not point to the imbalances observed prior to the financial crisis
Furthermore, it notes that, unlike in previous expansionary cycles, the indicators of risk and vulnerability to financial stability do not point to a “concentration of macroeconomic imbalances” such as those observed prior to the financial crisis.
Furthermore, the flow of new mortgage lending for house purchases grew by 27.5 per cent in 2025 and the number of mortgages rose by 14 per cent, buoyed by improved financing conditions. Despite this, the institution emphasises that lending standards remain stricter than in previous expansionary cycles and that risks to financial stability remain contained.
Stricter home-purchase conditions than in the main European markets.
The Bank of Spain notes that difficulties in purchasing a home are particularly concentrated in large urban areas and amongst lower-income groups, especially young people and those of foreign origin.
In this regard, it is worth noting that the proportion of households owning their main residence has fallen since the global financial crisis, whilst the rental sector has grown in importance.
The Bank attributes part of these difficulties to the fact that house prices have risen faster than household incomes, which has increased the financial burden of buying a home and made purchase conditions stricter than in the major European economies.
The ratio of purchase price to net income stands at 4.3 years for households as a whole, but rises to 6.8 years for non-homeowners, 7.1 years for young people and 7.6 years for households of foreign origin.
According to the report, the greatest obstacles lie in the rental market, particularly regarding new tenancy agreements. The home-ownership rate stood at 73.3 per cent, whilst the proportion of households in rented accommodation reached 20.2 per cent. Among those under 30, 54.7 per cent live in rented accommodation, and the rate at which young people aged up to 35 leave their parents’ home stood at 31.5 per cent in 2024, 13.5 percentage points lower than in 2007.
The Bank of Spain considers the lack of supply to be a serious problem in the Spanish property market. It highlights that the construction of new homes is not increasing enough to curb rising prices, meaning that building is taking place at a slower pace than required.
Factors limiting housing construction: lack of land, delays, labour shortages, etc.
Among the factors limiting the construction of new homes, the report identifies a lack of building land, delays in the implementation of urban development projects and constraints in urban planning management. Added to these are factors specific to the sector, such as declining productivity, the small size of businesses, labour shortages and limited profitability in residential construction and property development.
The organisation also points out that home purchases by non-residents and the use of properties for tourism reduce the stock available for residential use in certain areas, particularly on the Mediterranean coast, the islands and the main urban tourist destinations.
The housing shortage hinders financial progress
The institution also warns that the lack of housing can have significant macroeconomic and social consequences.
As it explains, “the gap between the growth in house prices and that of household income affects access to mortgage credit, consumption decisions and the ability of households to save, as they must make a greater effort to be able to purchase a home”.
It also points out that the persistence of difficulties in accessing housing may increase the number of households in a situation of social vulnerability and alter the intergenerational distribution of wealth. It also warns that difficulties in accessing housing reduce labour mobility and the efficient allocation of factors of production, with potential shortfalls in productivity.
The Bank of Spain further estimates that these obstacles may hamper the potential expansion of the Spanish economy due to their impact on demographics, human capital formation and the household savings rate.
In light of this situation, the Bank concludes that supply-side rigidity constitutes a structural problem in the Spanish housing market and argues that policies aimed at improving home ownership should prioritise measures designed to increase the availability of new homes.
Ineffective measures to increase the housing supply
It also emphasises that the division of powers between the various levels of government requires a high degree of coordination to ensure the effectiveness of measures, particularly in the areas of land use and town and country planning.
The report acknowledges that the various authorities are promoting measures to gradually increase the housing supply, although it considers that the scope of these measures remains insufficient to meet existing needs. In this context, it points out that local authorities have the budgetary and financial resources that would enable them to contribute to the funding of the expansion of the social housing stock.
Finally, the Bank of Spain states that measures aimed at curbing demand may, in the short term, alleviate situations of financial strain and vulnerability among households. However, it warns that their design must take into account the “possible unintended consequences” they could have on supply.