Spain | Reasons behind the scarce supply of housing

Since 2021 housing starts have been lower than homes created. Factors that could limit housing supply include a shortage of land ready to start new developments, regulatory uncertainty and labor shortages. Measures are needed to boost residential construction and rental supply.

Key points

• Key points:
• Since 2008, Spain has been one of the European countries with the lowest number of housing starts per capita. Between 2008 and 2022, housing starts (1.53 million) were far lower than the number of new homes created (2.40 million).
• Cities have land to develop housing. However, the proportion of finalist land, ready for construction, is limited. In Spain, the construction of a number of homes equivalent to 26% of the current residential stock is still pending.
• Housing legislation has undergone significant changes, destabilizing the development plans of developers, builders and rental companies. Some of the measures adopted discourage investment, introducing legal uncertainty, reducing profitability or discouraging economies of scale.
• Housing legislation has undergone significant changes, destabilizing the development plans of developers, builders and rental companies. Some of the measures adopted discourage investment, introducing legal uncertainty, reducing profitability or discouraging economies of scale.
• Productivity in construction has fallen back to 2008 levels and is 25.4% below the average productivity of the economy. In turn, the proportion of larger companies has remained stagnant, compared to the growth observed in the economy as a whole.

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