According to a recent academic study dubbed the “El Clasico” of the property market, conducted by Marta Gómez Puig of the University of Barcelona, Simón Sosvilla-Rivero of the Complutense University of Madrid and Adrián Fernández Pérez of the University of Dublin, the two largest Spanish cities, Madrid and Barcelona, have been experiencing a new, rapidly growing property bubble since 2023. The researchers emphasize that this overheating is driven not so much by ordinary homeowners, but by speculative investors, an influx of foreign capital, demand fueled by tourism and serious supply problems.
A key feature of this speculative bubble is the disproportionately rapid increase in house prices compared to rental prices, indicating purchases made in anticipation of future profits from resale, rather than for own use or long-term rental. In Barcelona in particular, three phases of such a bubble have been identified, the last of which began in August 2023, when house prices detached sharply from rent levels, indicating an unhealthy concentration of speculative investment and the purchase of properties primarily for resale or short-term rental. The problem of housing affordability in large cities such as Barcelona is exacerbated by excessive demand and insufficient supply, which, according to research, is directly linked to international migration and short-term tourism. The explosive growth in demand for rental housing has not been offset by a corresponding increase in construction, leading to a sharp increase in prices and the displacement of more and more locals from the market.
Catalan housing rights group Sindicat de Llogateres emphasizes that working families are now forced to compete with hedge funds and investment companies that make most of their purchases without a mortgage, viewing housing as an investment asset rather than a basic need. To combat this crisis, the group proposes a range of measures, including banning speculative purchases in congested housing zones, expanding public and sheltered rental housing, strengthening rent controls, especially for short-term rentals, and closing legal loopholes that allow residential spaces to be converted into corporate co-living spaces.
Recent events in Barcelona, where the investment company Vandor is accused of mass evictions in order to create co-living spaces, clearly demonstrate the urgent need for urgent legislative measures to protect housing rights and ensure that housing is a fundamental right, not an object of speculation.
The authors of the El Clasico analysis propose a radical rethinking of the approach to preventing economic overheating and speculative shocks in the housing market. In their opinion, the solution lies not in traditional measures such as property rights controls or price freezes, but in priority and large-scale investment in effective and affordable public rental programs. They argue that social rental housing serves as a kind of ballast that can counter speculative trends, ensuring stability and affordability of housing for the population.
In addition, the experts call on regional and central governments to actively invest in improving infrastructure and transport links in less overcrowded areas. The aim of this strategic move is to reduce the excessive burden on urban centres, which are becoming the epicentre of housing crises. More balanced territorial development, they believe, will help to address the underlying conditions that allow property bubbles to form and thrive, distributing population and economic activity more evenly.
However, despite the proposed solutions, the current situation on the Spanish housing market is causing an uneasy déjà vu of a bubble and a crash. For many who lived through the painful market crash of 2008, today's signals seem strikingly familiar: rapidly rising housing prices, simultaneously decreasing affordability for the population, stagnating real incomes and an ever-widening gap between speculative buyers focused on profit and those simply looking for adequate housing to live in.
At the same time, experts note key differences between the current crisis and the previous one: while the market was previously fuelled by cheap loans, now investors are often using their own cash. Moreover, it is the loopholes and inadequate regulation of rentals, not subprime mortgages, that are the main fuel for demand distortions. The end result, however, promises to be the same: entire cities risk becoming unaffordable “wastelands,” existing more for investor profits than for the fundamental housing needs of the population. The authors warn that unless public policy begins to match the reality – and this must happen quickly – the term “housing bubble” could very soon emerge from the taboo zone and become the accepted way to describe the situation in Spain’s largest cities.