Spanish Housing Prices: Should They Drop by 90%?

Housing prices have multiplied by a thousand while wages remain frozen

Sixty years ago, an illiterate worker could buy a new apartment in a provincial capital with one year's salary. Today, a graduate with three degrees needs two above-average salaries for sixty years to pay for the same property, which is no longer new. This difference is not an adjustment; it represents a thousandfold increase in price in current pesetas. A recent analysis circulating this week recalls that in 1970, the apartment cost 100,000 pesetas; in 2026, 100 million are asked for the same product, with the only difference being its age.

The comparison nobody wants to make

Historical data is stubborn. Direct testimony: a 120-square-meter apartment was purchased for 1,000,000 pesetas (equivalent to €6,000 today) when the monthly salary was 120,000 pesetas. That meant nine months' salary. It was paid off in five years. Another case: a 98-square-meter apartment, bought in 1976 for 160,000 pesetas, was settled in two years with direct payments to the developer, without a bank. In that Spain of illiteracy and poor jobs, housing was an attainable good. Today, with degrees and qualified jobs, it has become a luxury requiring half-century mortgages.

The Boyer Decree and the financialization of housing

What peine? Some point to the 1986 Boyer Decree, promoted by the PSOE (Spanish Socialist Workers' Party), as the turning point. That regulation liberalized land and eliminated rent controls, opening the door to speculation. "Everyone jumped on the bandwagon afterwards," it is argued. The result: housing ceased to be a right and became a financial asset. Developers and banks agreed to raise prices in coordination, and public administration collaborated with entities like SAREB (Sociedad de Gestión de Activos Procedentes de la Reestructuración Bancaria), which inherited toxic assets from the bubble and managed them without pressure to sell.

The Bubble, the Bailout, and SAREB

The 2008 crisis erupted, but the banking bailout changed the rules of the game. More than €100 billion were injected into banks, conditioned on state debt repayment taking priority over any other concern. Savings banks, competitors to major banks, were dismantled. SAREB, the "bad bank," became an instrument to sustain prices, not lower them. The result: an entire generation condemned to pay for the previous one's party.

A 90% Devaluation? The Debate Between Price Control and Cost Reality

The question hanging in the air is whether prices should drop by 90%. Proponents argue that housing is hyper-inflated and only a brutal devaluation would allow society to develop its life projects. Opponents argue that at 10% of the current price, construction would be impossible, assuming free land and a laborer earning €2,500 a month. In between, some propose price controls, a measure with known consequences of scarcity and chaos, while others demand more liberalization, although current examples show that path has only served to enrich a few.

Social Cost: Birth Rate, Immigration, and Housing

The problem transcends economics. Unaffordable housing has crushed the birth rate, forced the importation of labor to sustain the system, and generated growing social tension. It is noted that the arrival of immigrants, who share housing and pay whatever they can, has aggravated market pressure, but it is also recalled that without them, the productive system would collapse. It is a contradiction that no one seems willing to resolve.

Meanwhile, the musical chairs game has stopped: no one moves because no one can afford the next chair. Will anyone dare to say publicly that housing prices are inflated by 90%? For now, the answer is an uncomfortable silence.