A look at the issue of housing affordability
In Spain, as in other countries, housing affordability remains one of the most pressing social issues. According to surveys, more than 80% of residents believe that housing costs have become a serious burden on family budgets. Despite this, developers face challenges when launching new projects, which limits the supply on the market.
The role of construction costs and price trends
Research shows that while construction expenses make up a significant part of the cost of new housing, they don’t fully explain the rise in prices. An analysis of data from recent decades has found that in some cities, housing prices have grown faster than construction costs. For example, between 2020 and 2024 in Miami, housing prices rose nearly 9% faster than construction costs. This points to additional factors influencing the market.
The impact of regulation and support measures
One of the main barriers to increasing supply remains administrative restrictions. Experts note that measures aimed solely at stimulating demand, such as purchase subsidies, often lead to a further rise in housing prices. Scenario modeling has shown that if buyers receive significant financial assistance but the number of new apartments is not increased, prices will continue to grow and affordability will decrease. Moreover, such measures may trigger a rise in rental rates, as some buyers turn to the rental market and compete for the best properties.
Which measures are more effective: support for the luxury or the budget segment
A comparative analysis of different strategies revealed an unexpected result. Increasing the number of expensive new developments helps reduce prices not only in the premium segment, but also in the mid-range and budget segments. When affluent buyers choose new properties, they free up their previous apartments, which then become available to other groups of the population. This process triggers a chain reaction, gradually improving the situation across the entire market. Meanwhile, expanding supply only in the cheapest segment also helps, but the effect is less pronounced.
Public perception and misjudgments of the situation
A separate study examines how residents perceive the real estate market. A common belief is that homeowners oppose new developments out of fear that their property values will decline. However, surveys reveal that most owners would actually prefer prices to fall rather than continue rising. At the same time, only a third of respondents understand that increasing the number of homes leads to lower prices and rent. This lack of knowledge about market mechanisms leads to support for inefficient measures such as rent controls or direct subsidies, while initiatives to simplify construction receive less approval.
Who is blamed for rising prices
Another key finding concerns who is held responsible for the current situation. Citizens are more likely to blame developers and landlords than government authorities, who set the rules and restrictions. This complicates the advancement of reforms that could truly improve housing affordability.
Key findings of the studies
An analysis of the real estate market in Spain and other countries shows that restrictions on construction and a shortage of new properties are the main reasons for high housing costs. To improve the situation, it is necessary not only to inform the public about how the market really works, but also to review existing regulations to encourage more supply. Only a comprehensive approach will make housing more accessible to a broader segment of the population.
