Daniel Lacalle and why your parents could pay off a home back then

Lacalle blames the delay in buying a home on not going out or spending

The gap between house prices and what people earn from work has been a fixture of Spanish after-dinner conversation for years. It was reignited by the diagnosis attributed to economist Daniel Lacalle, a recurring name in the PP's orbit: homes used to be paid off in five or ten years, and today it takes thirty, with the blame falling on buyers who get distracted by spending. Against that narrative stands the case of a father who, before turning 30, had a paid-off house, a paid-off car, three children and 14 years of Social Security contributions.

The debate, however, cannot be settled with an anecdote. There are figures on wages, tax burden, mortgage rates and cost of living that show where the argument fits and where it breaks down.

The leisure argument: how much goes on terrace drinks and the movies

The spending thesis has a measurable part. Two beers and some snacks for two people come to around 35 euros; adding a movie ticket adds 20 more. The round total is 55 euros, about 9,200 old pesetas, for a single night out. Multiply by one weekend a month and it mounts up.

The counterargument notes that the same generation now portrayed with the familiar avocado toast simile filled nightclubs, video stores and bars during the boom years. That people spent back then too, just on other things. And that packed terraces are not an invention of the last decade.

A calculation that circulated in the debate sums it up wryly: even twenty years without setting foot in a coffee shop that writes your name on the cup would not cover a down payment on an apartment.

Average salary vs most common salary: where the mismatch lies

Here the numbers are uncomfortable. The average gross annual salary stood at 28,360 euros in 2022. The figure surprises anyone earning much less, and the explanation is methodological: high salaries distort the average, while the most common salary is around 18,500 euros gross a year. Most wage earners live on the second figure, not the first.

The contrast with housing costs needs no embellishment. A normal apartment in Sarracena or San Blas, unpretentious neighborhoods, costs around 200,000 euros; in the Llobregat area the figure is similar. The down payment required for any mortgage is close to 40,000 euros.

With two salaries bringing 2,500 euros into the household, the most optimistic calculation holds that there is even enough left for a treat. The opposite scenario starts from a paycheck of 1,200 euros: 650 in rent and about 115 in utilities leave 435 euros free to eat, dress and live.

VAT from 12% to 21% and an IRPF (Spain's income tax) that began at 1%

The tax burden is another axis of disagreement. VAT was introduced in 1986 at a rate of 12% and today stands at 21%. IRPF, for its part, arrived in 1933 with an exemption threshold of 100,000 pesetas and rates from 1% to 7.70%; in 1935 the threshold was lowered to 80,000 pesetas and the top rate rose to 11%.

From there comes the idea that the state now takes a share of income that did not exist before and that squeezes saving capacity. There is also an estimate circulating that a normal 1980 salary should be equivalent today to 3,500-4,000 euros to reproduce the same conditions. The figure does not stand on its own, but it points in the direction of the discontent.

With no qualifications, no factory would turn you away

The labor market changed more than leisure. The generation now being compared started working at 17, with no qualifications, because demand for labor was such that a semi-literate person was hired the same day. A few years later they moved to a large factory with better pay and an internal career ladder. Today that same factory demands dual degrees and languages for an entry-level job.

The real life of the bottom end of the labor market appears in a specific case: 40 hours a week on rotating shifts at a nursing home, with a base salary of around 1,070-1,200 euros. Any unexpected expense eats up the month.

Rates at 10% and the mortgage payment that ate your salary

We should not idealize the past. Mortgage rates in the 1990s were around 10 times higher than today's, and the French amortization system meant the initial payment was almost all interest. You could end up paying several times the price of the home. The mortgage payment did eat your salary, yes.

Even so, that fact does not rescue the leisure thesis. There was inflation that diluted debt, frequent salary increases, and liberalized developable land that kept the price per square meter down. None of that is on the table today.

The point where the analysis gets stuck is always the same: whether the gap is explained by what you spend or by what a house costs. Both things are true. The problem is that the first can be corrected at home and the second cannot.