Spain’s housing crisis is deepening and urgent action is needed to fix it.
That’s the warning from the International Monetary Fund (IMF), which says soaring property prices and a shortage of homes are making it harder for people to afford housing and even move for work.
According to the IMF, a combination of factors is driving the surge in prices.
Population growth, immigration and lower interest rates have all pushed demand higher, while the supply of housing has failed to keep pace.
The result is a sharp increase in prices – particularly in cities and coastal hotspots like the Costa del Sol – with pressure now spreading into surrounding areas.
While the IMF welcomed recent government measures, including plans to boost affordable rental housing through new public initiatives, it warned they are not sufficient.
‘The supply of housing needs to increase much faster,’ the organisation said, pointing to a significant shortfall in high-demand areas.
What needs to change
The IMF is calling for a series of reforms to speed up construction and increase availability.
These include:
- Releasing more land for development
- Fast-tracking building permits
- Simplifying bureaucracy
- Reducing legal uncertainty around projects
It also suggested using tools like AI to speed up licencing processes – something already being tested in some regions.
Rethink rent controls
The report also raises questions about rent controls.
Unless further evidence shows they are effective, the IMF suggests they should be scrapped after their initial three-year period, warning they may actually reduce the supply of rental housing.
It also recommends changes to Spain’s housing law so that regions declaring ‘stressed areas’ must take concrete steps to increase supply, not just cap prices.
Warning over mortgage risks
Beyond housing supply, the IMF also flagged potential risks in Spain’s mortgage market.
While lending remains broadly stable, there are signs that conditions are starting to loosen, with more high loan-to-value mortgages being issued.
To prevent future problems, the IMF recommends introducing stricter rules based on borrowers’ ability to repay, which could later become mandatory if risks continue to build.
It warned that without faster action to increase supply and stabilise the market, rising prices could continue to squeeze households, limit mobility and create longer-term risks for the economy.
Read more Andalucia news at the Spanish Eye.
