Spain added 1.22 million households between 2021 and 2025 but completed just 466,000 homes, leaving a gap of approximately 756,000 dwellings – a situation that ING says will be a ‘defining political issue’ ahead of the country’s forthcoming elections.
According to ING economist Pablo Muylle, the deepening housing crisis is the “main reason” for the snap election, adding that while rent controls and stronger tenant protections will help households facing rising costs, they cannot resolve the underlying housing shortage.
Following the rejection of two housing decrees by parliament, and widespread protests after the eviction of an 87-year-old tenant in Madrid, Prime Minister Pedro Sánchez called an early election, which is set for 29 November.
‘Politically sensitive’
“Housing has become one of Spain’s most politically sensitive issues, particularly for younger households that cannot afford to buy and struggle to find a reasonably priced rental,” Muylle noted.
“The election debate will centre on whether stronger tenant protections can make renting affordable again. They can help, but they cannot solve the problem on their own.”
Rental costs are increasingly divided between existing tenants and people seeking new accommodation. For contracts signed after 26 May 2023, annual rent updates are capped by Spain’s IRAV reference index, which stood at 2.47% in August 2026. For some older contracts, consumer price inflation, which reached 4.3% in August, may be relevant, depending on the contract and applicable legislation.
By comparison, advertised rents on property portal Idealista rose by around 6% year on year during the summer, following increases close to 10% in late 2024.
“Young people leaving home, recent migrants, separating couples and workers moving to expanding employment centres are most exposed to the open market,” said Muylle. “Existing tenants may be protected against sharp annual increases, while households looking for a new property compete for a limited pool of available homes.”
Housing shortage
Spain’s current housing shortage didn’t happen overnight, ING noted, with residential construction dropping sharply following the financial crisis and remaining weak for much of the next decade.
“The country moved from building too much before 2008 to delivering relatively few new homes afterwards,” Muylle added.
“For several years, this was less visible because household growth was also subdued. But household formation began to pull away from housing delivery around 2016 and 2017. Since then, demographic demand has increased while completed housing has responded only gradually.”
The shortage is also affecting property purchases. Spain’s national house price index rose by 12.2% year on year in the second quarter of 2026, following increases of 12.9% in both the first quarter and the final quarter of 2025.
“With housing supply likely to remain constrained, upward pressure on new-contract rents is unlikely to disappear quickly, regardless of the election outcome,” said Muylle. “Spain’s next government should therefore be judged on two outcomes: how much tenants pay and how many people can find a home at all.” Read more here.
