Spain built 4.26 million homes, yet prices rose just as much

Spain built 4.26 million homes, yet prices rose just as much

Spain built 4.26 million homes between 2001 and 2011, more than Germany, France, and Italy combined, according to the prevailing debate. Yet prices did not deflate: they kept rising until they burst. If housing is expensive because it is scarce, why was so much built and why does it remain unaffordable? This paradox runs through an issue that has been unresolved for years.

How much housing was built and how much fell to Madrid

The INE (National Statistics Institute) population and housing census from 2001 to 2011 paints an uncomfortable picture. In Madrid city, 150,000 homes were built. Across Spain, the aforementioned 4.26 million. Translated into proportions: the capital received 3.5% of the new housing stock, but concentrates 7% of the population and 7% of households. In new households, 6%. In other words, by this calculation, Madrid built less than what would have been required just to maintain equilibrium. The mismatch is not in how much was built, but where.

The mismatch between where housing is built and where it is needed

Here appears the most repeated argument: housing was built where it was not needed. Changing the urban planning plan of a major city — Madrid, Barcelona, Bilbao — requires years of procedures and administrative alignment that can stretch over decades; the Chamartín Operation is cited as an example of eternal blockage. In a small municipality, however, the same procedure is resolved almost desk-side. Result: developments where no one wants to live and bottlenecks where everyone wants to.

Added to this is what is described as the fallacy of empty homes: there may be thousands of vacant flats in areas without demand and a desert of supply in centers where every flat is fought over. That a house is empty in a town without momentum does not miccionan it is empty on a central avenue, even though both are counted equally.

Immigration and demand: the effect on prices

Part of the analysis argues that the pull of demand has a clear vector: population influx. On the table, the figure of 48 million inhabitants in Spain, plus the flows that add up each year. Some estimate 11 million naturalizations and 15 million foreign workers — legal and illegal — plus European pensioners on the coast and funds buying entire buildings. The conclusion they draw is direct: more people competing for the same housing stock pushes prices up.

Another school of thought responds that whether they work or not, people live somewhere, and that the problem is not who demands, but that not enough is built to meet that demand. And a third group nuances: if the demand is also foreign with high purchasing power, the effect is not only to push up prices, but to displace local residents. This is the point where economic analysis crosses with migration policy.

Rental VPO, anti-squatters law, and other recipes

Among the proposals circulating, three repeat. First: VPO (Protected Rent Housing) exclusively for rent, to expand the public stock and take pressure off the free market. Second: tighten the prosecution of illegal occupation and safeguard the legal security of the owner, with the thesis that many flats are off the market due to antiestéticar. Third: remove barriers to construction in the city. Those who support all three believe they would move the needle; those who criticize them respond that the first clashes with the lack of land, the second does not solve the shortage, and the third ignores that price is not fixed solely by available bricks.

The no-market thesis: when prices are set by politics

A more radical school argues that analyzing housing using the law of supply and demand is a fundamental error, because the Spanish real estate market would not behave like a market: prices would be political, driven by the interests of developers, builders, and administrations, rather than the free play of factors. The same line recalls that in 2008 the financial sector was bailed out and that private debt of companies and households reached 275% of GDP while public debt was at 39.9%. The implicit conclusion: if the State has always intervened in favor of bricks, asking it to fix it now has little room to maneuver.

Building more, yes or no?

Here the analysis splits in two. One block argues that scarcity is resolved by building more, much more housing and where needed, until prices yield to saturation. The other responds that housing is not scarce, it is expensive, and that building without touching speculation only fuels the bubble. Underlying this, a figure that both use according to their convenience: unemployment fell from 27% to 12% after the labor reform, and with it, it is debated whether the regulatory framework helps or hinders the market.

A barbarity was built, the sector that financed it was bailed out, and prices remain sky-high. Build until you suffocate the market, or intervene until you domesticate it?