House prices in Spain will rise by 5% every year despite growing concerns that millions of people are being priced out of the market.
That’s the warning from the General Council of Economists, which says a chronic shortage of homes compared with demand will continue to push costs higher for the foreseeable future.
While the expected increases are lower than those seen in recent years, economists stressed this does not mean homes will become more affordable.
Instead, they warned that young people, migrants and lower-income households are increasingly unable to buy property due to soaring prices and expensive mortgages.
According to the report, access to home ownership has deteriorated dramatically over the past three decades.
Between 1995 and 2022, the cost of buying a home doubled relative to incomes, with the average property rising from the equivalent of four years’ salary to around eight years’ salary.
As a result, a growing number of people have been forced into the rental market, where competition is also driving up prices.
The pressure is particularly acute in Spain’s largest economic hubs, including Madrid, Barcelona, Valencia and Malaga, where strong job markets continue to attract new residents while housing supply struggles to keep pace.
Economists noted that rising house prices are not unique to Spain, with countries including Germany, the US, Italy, France, the Netherlands and Japan experiencing similar trends.
However, Spain’s relatively limited housing supply and shrinking stock of both social housing and rental properties have made the affordability crisis especially severe.
Lower-income households are bearing the brunt of the problem, with many spending such a large share of their income on rent that they are unable to save for a mortgage deposit.
The report warns that this is delaying major life decisions such as moving out of the family home, starting a family or buying a first property, while also reducing labour mobility.
To address the crisis, the economists urged the Spanish government to encourage more housebuilding and introduce incentives that make residential development more attractive to developers.
