The housing crisis in Spain continues to worsen, with experts citing banks’ conservative lending practices as one of the causes. Financial institutions prefer to invest in new projects in prestigious areas, overlooking initiatives that could improve the affordable housing market.
According to an annual study by the financial company Castling, banks primarily support the construction of new properties in central and expensive locations. Meanwhile, projects involving the renovation of old buildings, the conversion of offices into residential spaces, and other initiatives with a high social impact are left without the necessary funding.
Market analysis has shown that most developers still rely on one or two major banks, making them vulnerable to changes in lending conditions. More than 60% of surveyed companies report that banks demand additional guarantees, while nearly 40% believe that the payment deferments offered are insufficient for the successful completion of projects.
As a result of this policy, the main credit flows are concentrated in the hands of the country’s five largest banks. Santander, BBVA, and Sabadell control funding for high-end projects with major developers; CaixaBank mainly works with ‘build to sell’ projects for mid-sized companies; and Ibercaja specializes in supporting cooperatives and small developers, especially in the regions of Aragón and Madrid.
This imbalance in favor of high-end housing means that regions experiencing the greatest housing shortages—namely, peripheral and sparsely populated areas—are left without new investments. As a result, access to housing for the middle class and residents of “España vaciada” becomes even more difficult.
Castling experts recommend that developers avoid working exclusively with a single bank and instead form a pool of several financial partners. Additionally, they suggest making more active use of alternative funding sources, such as investment funds, family offices, and crowdfunding platforms.
For value-added projects, specialists advise combining bank loans with private capital. In the case of residential new builds, it is recommended to strengthen commercial expertise and attract private investors for joint ventures. For large-scale projects without a guaranteed tenant, phased financing linked to occupancy rates may be the optimal solution.
Thus, solving the housing problem requires not only a change in banks’ approaches but also greater flexibility from developers. Only comprehensive measures will help increase the supply of affordable housing and reduce social tension in the real estate market.
