The Bank of Spain has noted a major gap between housing needs and supply in its 2025 annual economic report, estimating a need for 750,000 additional homes nationwide. The institution highlights that this shortage is unevenly distributed, with six provinces—Madrid, Barcelona, Alicante, Valencia, Murcia, and Málaga—bearing the brunt of the crisis. These areas face the steepest challenges, with Madrid’s housing stock offering only 9.9% of properties available for residential use, far below the national average of 27.1%. Ávila, by contrast, shows a much higher availability at 58.2%.
The report attributes part of the shortfall to the growing number of homes occupied for non-residential purposes. Around 400,000 properties are used for tourist rentals or second homes, limiting their availability for families. Non-resident buyers accounted for 7.4% of total home purchases between 2021 and 2025, averaging 50,000 units annually. This trend is most pronounced in Mediterranean regions, where second-home demand and tourism overlap.
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Spain’s housing crisis is compounded by a paradox: approximately 450,000 homes constructed during the 2000s property boom remain vacant. Many are located in areas unsuitable for families or require significant repairs. The report notes that these properties are often in poor condition or situated in regions where demand has shifted away from single-family homes.
Spain and Portugal are highlighted as the European economies where new housing construction has lagged most sharply behind population growth. Spain faces a cumulative shortfall of 6.6%, compared to Portugal’s 3.7%. Despite Portugal’s smaller population, its housing crisis is more severe in major cities. Italy trails with a 400,000-home deficit, while France maintains a rough balance. Germany is the only major eurozone country to reduce its housing deficit by 0.5% since 2021.
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Regulatory hurdles and fragmented governance are major obstacles. Overlapping rules between local, regional, and national authorities slow urban planning. Skilled labor shortages and declining productivity further stall construction. In six major urban areas—home to 36% of Spanish households—potential housing stock remains untapped. The report estimates 1.1 million homes could be built in these regions but remain unstarted, though only 320,000 are currently planned.
The situation highlights the need for policy changes to address the gap. While the Bank of Spain does not propose solutions, it emphasizes the urgency of resolving regulatory bottlenecks and addressing the mismatch between housing types and demand. Experts outside the report suggest that repurposing vacant properties or streamlining planning processes could help, though such efforts face political and logistical challenges.
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Spain’s housing shortfall reflects wider structural issues in the economy, including demographic shifts and the lingering effects of the financial crisis. With demand outpacing supply by a wide margin, the challenge of meeting future needs without exacerbating inequality or driving up prices remains a pressing concern for policymakers and residents alike.