On Idealista, the portal with the highest number of housing offers in Spain, 2100 flats were published in the city of Barcelona last month – the numbers fluctuate very slightly each day, but the average remains the same. Of these published flats, the vast majority, almost 60%, exceed 1500 euros. On the other side of the budget, we find 182 flats for less than 1,000 euros, or 8.6% of the published flats. However, if we move to the upper range, apartments for more than 3,000 euros, there are 192 on the portal, 9.14% of the total. There are more luxury apartments on offer than those that are moderately affordable for minimum wage earners.
According to the latest data from Incasòl, the average annual rental price for an apartment in Barcelona is €1,124.62. Considering that the minimum wage in Spain for the same year is €1080 gross, the recommendation to spend 30% of one’s income on housing is a long way off. The Bank of Spain warned in its 2022 annual report that “in 2021, 48.9% of Spanish households living in rented accommodation were at risk of poverty or social exclusion – the highest percentage in the EU”. In the same study, the Bank of Spain analyses that “high rents relative to labour income increase the proportion of the population at risk of social exclusion and of households with limited spending capacity on other goods and services”.
Youth, perpetual precariousness
The situation is particularly difficult for young people. According to the Spanish Council for Youth (Spanish acronym CJE), only 16.3% of young people were able to leave the family home in the first half of 2023, almost half the European average (31.9%). It has also recorded “the highest average age of emancipation in Spain in the last 20 years: 30.3 years”.
Almost half of young Spaniards earned less than 1,500 euros a month last year, and three out of ten earned less than 955 euros, according to the OECD’s Spain 2023 economic study. For rent alone, the CJE points out that a young person would have to spend 93.9% of their net annual salary, and the average rental price in Spain in the first half of 2023 is the highest on record: 944 euros per month.
Few owners owning many homes, controlled supply pushing up prices
Designed as nerve centres, metropolises are subject to a cross-tension due to various factors: the imbalance between housing supply and demand, which in turn leads to sudden demographic changes. The paradox is that where the most expensive housing is located, there is also the greatest demand for renting, as required by the gravitational pull of economic activity that large cities become. In the case of Barcelona, tourism also plays a key role. According to the INE (National Statistics Institute), in August 2023 there were 7531 dwellings registered as tourist accommodation, not counting those that operate in an unregulated manner. This phenomenon represents a diversion of dwellings that cannot be used as permanent housing, further limiting the supply for this purpose. The driving force behind the sharp rise in prices is the housing stock, which is subject to a trend towards profitability and profit rather than as a right: ownership is becoming increasingly concentrated.
Despite the fact that, according to the report of the Observatori Metropolità de l’Habitatge a Barcelona, a very high number of homeowners own one home (84.0%), the alarming figures are those who own more than one home. To extract data from the same study: owners of 5 or more dwellings represent 2.2% of the total number of owners (11,777) and own 23.2% of the dwellings (184,111). Those owning more than 10 dwellings represent 0.9% of the total number of owners (4,572) and own 17.2% of the dwellings (136,324). Those owning more than 15 dwellings represent 0.5% of the total number of owners (2,593) and own 14.0% of the stock (111,140). As for the public housing stock, it represents only 1.8% of the total, despite being one of the cities with the most public housing in Spain.
Another addition to the network are the banks that own housing, including the “bad bank” Sareb, which had 767 homes in Barcelona by mid-2023. Investment funds, also known as “vulture funds”, often buy housing to obtain economic returns: a notorious case was that of the “Blackstone” fund, which the media La Directa revealed in an investigation in 2022 as the owner of more than 5,550 homes in Catalonia, 891 in Barcelona. Both banks and funds have empty flats, a fact that favours a lower supply and a forced increase in prices, as denounced by the Sindicat de Llogateres in 2022, Blackstone alone had “40% of its flats empty”.
The concentration of properties and the recurrent management of the ubiquitous real estate agencies – the Indomio portal lists 180 in the city of Barcelona alone – make it easier for them to set prices according to their own criteria. In an attempt to alleviate the situation, Catalonia will be the first community to apply the Housing Law, which sets a ceiling on rental prices from February. Barcelona is one of the municipalities declared to be “stressed” and the rent ceiling will be based on the reference index set.
Emerging slums in Portugal
Meanwhile, agencies such as Uniplaces, HousingAnywhere or Spotahome, which offer rentals aimed at foreign students (such as Erasmusu, which has since been taken over by Spotahome) or the so-called “digital nomads”, are taking housing that could be rented on a long-term basis off the market. The system, designed as a kind of long-term Airbnb, allows you to rent an apartment or a room with little effort, for the months you choose and with a virtual visit (you cannot physically see the apartments before entering). The platforms charge a commission and offer the accommodation only temporarily, targeting the market at people who are just passing through.
One of the European capitals where Uniplaces has a large offer is Lisbon, a metropolis in one of the countries that has the so-called “digital nomad visa”, just like Spain. In the case of Portugal, one of the requirements to obtain it is to earn at least four times the Portuguese minimum wage per month. With this condition, it is expected that agencies specialising in renting to foreigners will inflate prices, which in turn will affect the whole problem of access to housing. Living in a country with a much lower standard of living for a higher living wage is a bargain, but not for the local population.
Just over half an hour’s drive from Lisbon is a town that attracts tourists with its bucolic scenery. There is Carcavelos beach, one of the most popular in the region, with a great atmosphere: beach bars, music, good waves. There is Cascais, a municipality with all the ingredients to become fodder for speculation.
Behind the scenes, the reality is that in Quinta dos Ingleses, a park in the area, there is a settlement of tents as a desperate alternative to the exorbitant prices. According to data from the real estate specialist Properstar, in August 2021, an apartment in Cascais cost 15 euros per square metre. Two years later, in August 2023, the price has risen to 25 euros per square metre.
The cheapest flat, a studio apartment with no bedrooms, has the lowest rental price at an average of €1167. The average price of an apartment in Cascais is €1917, according to data from the property portal. The minimum wage in Portugal will be €886.7 in 2023, up €63 from the previous year. Although the threshold has been raised, it is clear that it is not enough: renting an average apartment in Cascais costs 116% more than the minimum wage.
Portugal’s National Statistics Institute reports in its September 2023 report on housing valuations that the average value of homes was “1197 euros/m2 in August 2023, an increase of 6.3% over the same month last year”. It also points to two areas under alarming economic pressure: “The highest values were observed in the Algarve (2178 euros/m2) and in the Lisbon metropolitan area (2059 euros/m2)”.
Cascais is the portrait of unsustainable tension in the Lisbon area. Tents are becoming the new shanty town in a place where prices are out of control. At the same time, foreign investment shows a fixation with the place: according to Idealista, Cascais is the fourth most sought-after Portuguese municipality by foreigners. North Americans top the list, accounting for 32% of the demand for houses priced between 300,000 and 600,000 euros.
Loulé, the Algarve’s most populous municipality, has also attracted foreign money. With around 72,000 inhabitants – according to the latest data, from 2021 – it is the second city to attract the most foreign capital, after the capital Lisbon, with British buyers leading the way and North Americans and Germans when it comes to luxury homes. The situation in the Algarve, Portugal’s southernmost region, is borderline as it has the highest prices in the country, according to the Portuguese National Statistics Institute report. The situation in and around Lisbon, and by extension the country, is the story of a scourge shared with other major European cities.
