Idealista warns Spain faces rising shantytown risk

Idealista warns: Spain is heading toward shantytowns

Fernando Encinar, co-founder of Idealista, stated bluntly at a real estate event organized by IESE, Savills, and Tinsa: "In Spain, we are moving toward shantytowns." He was not referring to a distant hypothetical scenario, but to a situation that, according to his diagnosis, is already underway. Housing supply is drying up at what he calls a dramatic pace, and political decisions, he argues, are exacerbating the problem rather than solving it.

Rental supply plummets in Madrid and Barcelona

The figures cited by the portal are telling. In Madrid, available supply has dropped from 14,000 to 8,000 units. In Barcelona, similar volumes have fallen to just 5,000 apartments. Encinar describes this as a drain: the inflow of rental properties has dried up, investors who used to renovate hundreds of thousands of homes for the market have disappeared, and funds, he says, are divesting at an unprecedented estimulante ilegal.

According to his analysis, the consequence is that the rise in home sales over the past year is not driven by enthusiastic new buyers, but by tenants pushed out of the rental market. People who can no longer find anything are forced to buy or simply fend for themselves.

"We will see shantytowns": what it exactly means

Encinar's prediction is literal: "People will build their own houses, and the social problem will be enormous." He is not talking about a nostalgic return to post-war shacks, but a spontaneous phenomenon of precarious self-construction due to the impossibility of accessing regulated housing. The Idealista founder attributes this to a combination of factors: reduced supply, legal insecurity for owners, and a regulatory framework that, in his view, punishes those who put their homes up for rent.

His prescription is as simple as it is politically uncomfortable: "take ideological hands off a problem solved by economics." Translated: guarantees, legal stability, and security for property owners. The opposite, he says, of what is currently being done.

Owners as enemies: the thesis of legal insecurity

Encinar focuses on the rent update index, which he claims assumes it will always remain below inflation. His quote sums up the sector's frustration: "The message we give to owners is: you will pay your inflation and also finance the tenant's." With this outlook, he argues, there are equally or more profitable vehicles than housing, such as treasury bills, so capital leaves.

This argument resonates with concrete experiences. A commercial property owner in a Catalan city near Barcelona reports receiving calls from people without resources seeking to occupy it as housing because they demand less than for a 110-square-meter apartment. His conclusion: stop looking for tenants, sell only, or keep it closed. Legal insecurity, he says, does not allow for risks.

From squatting to shantytowns: the social debate

The conversation shifted to broader grounds. Some argue the issue is distribution, not supply. Others point to immigration as a pressure factor on demand, though without data quantifying it. And some recall that shantytowns were massive in Spain during the sixties and seventies, and those neighborhoods were resolved through public relocation policies.

The ironic note comes from those pointing out that under current regulations, one cannot even legally build a shack: land, license, and paperwork would be required. The implicit conclusion is that the shantytown phenomenon Encinar describes will not be orderly, but proof that the system has stopped working for a growing part of the population.

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Encinar's prediction is uncomfortable because it offers no happy ending. If supply continues to drain and capital keeps fleeing, the scenario he paints—precarious self-construction, pressure on land, and social conflict—seems likely to materialize. Or not. It depends on whether someone, at some point, decides that economics matters more than the narrative.