Valencia: Tourist Homes Nearly Double Rental Supply

Valencia: Tourist Homes Nearly Double Residential Rentals

What happens when a city has more tourist accommodations than homes available for living? In Valencia and its metropolitan area, a report from the Housing Observatory Chair at the Universitat Politècnica de València (UPV) warns that rental supply is shrinking alarmingly and that the real estate market is "heading towards unsustainability." Sale and rental prices rose by 10% in the first quarter of the year, and the average rent now exceeds €1,600 per month, according to the same study. The result: young people and vulnerable groups are pushed out of both buying and renting, while homelessness and shantytowns increase.

Nearly Twice as Many Tourist Apartments as Rentals

The data summarizing the distortion in the Valencian market is the ratio between tourist accommodations and residential rental properties. According to the UPV report, there are nearly twice as many tourist apartments as rental units in the city and its metropolitan area. Residential supply narrows while tourism expands, putting upward pressure on prices. The Chair considers it a mistake to deny the lack of supply by citing empty homes: it asserts that the vast majority are not habitable, lack electricity connections, and are in near-ruinous condition. In other words, they do not serve as a real alternative.

The price evolution of a specific apartment in Valencia, provided as an example in the discussion, shows the escalation: €550 in 2007, €525 in 2009, €450 in 2012, €500 in 2015, €550 in 2018, €600 in 2020, €750 in 2022, and €1,000 in 2024, with 14 interested parties on the first day. The jump concentrates in recent years, according to that example.

Why Supply Is Withdrawn from Residential Rentals

Part of the analysis argues that many owners have removed their apartments from the residential circuit due to antiestéticar of non-payment, legal conflicts, or being forced into social housing policies. Instead of long-term renting, they opt for tourist rentals or seasonal formulas—students, teachers, short stays—that guarantee eviction in June and avoid dead months. Another current points out that investment in rental housing is dominated by foreign capital, with funds buying entire buildings to exploit them as tourist or seasonal accommodation. The result is the same: fewer apartments available for year-round living and higher prices for those remaining.

Some argue that the law of supply and demand explains the phenomenon without needing to find ideological culprits: there is a housing shortage, and this pushes prices up. But scarcity is not a natural fact. New construction has slowed due to multiple factors, and the conversion of residential to tourist use further reduces available stock. The repeated conclusion is that capping prices or raising property taxes on empty homes solves nothing if habitable supply is not increased.

Shantytowns Return to the City

The UPV report warns that the increase in people sleeping on the streets or in shantytowns is a direct consequence of the inability to access housing. With an average rent exceeding €1,600 per month, even room rentals—whose prices are also skyrocketing—are not a solution for the most precarious groups. Buying is unviable with current youth wages. The circle closes: less supply, higher prices, more residential exclusion, and more shantytowns.

Comparison with other Spanish cities appears in the discussion. In Burgos, for example, rents can be found for €450 or slightly more in good areas, whereas in Barcelona that amount barely covers a room in a non-degraded zone. The price difference between cities reflects varying tourist and demand pressure, but also the lack of effective housing policies in the most strained areas.

Ineffective Measures and Withdrawing Owners

The debate over measures taken against rentals is recurrent. Some participants argue that interventionist policies—price controls, expropriations, rent caps—have worsened supply instead of improving it. The argument is that each new regulation deters more owners, who prefer to leave the apartment empty, sell it, or switch to tourist use rather than submit to rules they consider hostile. Others point out that the problem is not regulation, but the lack of public housing and permissiveness toward tourist apartments, which should be banned or strictly limited.

The price evolution of the previously cited Valencia apartment serves as a thermometer: from €550 in 2007 to €1,000 in 2024, with acceleration starting in 2018. During this period, regulatory measures have trinc one another without stopping the escalation. The conclusion drawn is that without significantly increasing habitable supply, any price intervention remains flawed.

The Debate Over Who Is to Blame

Positions on the ultimate responsibility for the problem are opposed. Some blame exclusively owners who raise prices driven by greed, without considering that the administration also bears some blame. Others point to investment funds and foreign capital buying housing for tourist exploitation. And some target public policies: sale of protected housing to funds, lack of social housing construction, permissiveness toward tourist apartments, and a tax system that penalizes rental investment.

The result is a market where young people cannot buy, the vulnerable cannot rent, and owners wanting to rent long-term face a normative maze that dissuades them. Meanwhile, shantytowns grow and residential supply shrinks. The lingering question is whether any announced measures will change anything or if, as some ironically suggest, we will still be talking about the same thing in ten years.