“Residential supply has responded inadequately to the growth in demand”, the Bank of Spain states in its 2025 annual report on the performance of the national economy. The institution estimates that a total of 750,000 new homes would be needed to close the gap between newly formed households and the available housing stock.
Its experts warn, however, that this situation is not the same in every Spanish province. While Ávila has 58.2% of properties in its housing stock that could be brought onto the residential market, Madrid is limited to just 9.9%, compared with a Spanish average of 27.1%. The areas hardest hit after the capital are Barcelona, Alicante, Valencia, Murcia and Málaga.
The BdE also recalls that this increase is limited in part by the persistence of homes used for tourist or short-term rentals (around 400,000 properties) or as second homes for domestic and foreign owners. “In the period 2021-2025, home purchases by non-resident buyers accounted for 7.4% of the total, with an annual average of 50,000 dwellings”, the report states, stressing that this problem is particularly acute in the Mediterranean.
There is also the paradox that across the country around 450,000 homes are scattered that were built during the property boom of the 2000s and stand empty, either because they are in locations unsuitable for families or because of their state of repair.
Growth in supply held back by regulation, lack of skilled labour and the shift towards other forms of housing
“Spain and Portugal“, the annual report warns, “stand out among the economies where the growth in new housing construction has lagged most behind the increase in resident households”, with cumulative housing shortfalls of 6.6% and 3.7% respectively in relation to the existing stock.
Even so, the Portuguese nation (whose population is also suffering a severe housing crisis that is worse in its big cities) has a shortfall of only 300,000 homes compared with Spain’s 750,000, although still ahead of Italy’s 400,000. While France remains broadly in balance, Germany is the only major eurozone economy to improve its deficit by 0.5%.
Bureaucratic hurdles, together with differences and overlapping regulations between the various tiers of government (town councils, regional governments and the state itself) are preventing any acceleration in housebuilding in Spain; slow-moving urban planning procedures, a shortage of suitably skilled labour and a drop in productivity are also to blame.
“In the six major urban areas, where 36% of households live, the number of homes that could be built but have not yet been started would be around 1.1 million”, the BdE notes. However, “the potential number of homes planned in the capitals of the six major urban areas falls to around 320,000”.