In Spain, two cities face the same housing crisis but are responding in fundamentally different ways. Over the past decade, the cost of housing in Madrid and Barcelona has soared – with rents rising by about 60% and sale prices by 90% – leaving young people, working families and retired people struggling to stay in their homes or even find one. While one city is betting everything on construction and giving free rein to big investors, the other is cautiously trying to steer the housing market towards the public good, despite political and institutional constraints.
The current crisis is the product of decades of government intervention designed to turn housing into a financial asset. Since the 1980s, Spain has followed a familiar playbook: dismantling social housing, removing rent controls for new contracts, offering tax breaks to owners and fuelling massive mortgage debt. This model triggered successive construction booms accompanied by steep price increases. Since the mortgage crisis of 2008, more than 1.3 million units have entered Spain’s rental market – homes lost by working-class families and scooped up by investors, including large private equity firms.
After years of tenant mobilisation, the Spanish government passed a new housing law in 2023, giving regional and local authorities the power to cap rents, raise taxes on vacant homes and ban agencies from charging tenants fees. Additional measures in 2024 and 2025 have marked a shift away from neoliberal orthodoxy. However, Madrid, governed by the conservative People's Party, has openly boycotted the new law. Its president, Isabel Díaz Ayuso, has courted global investors, assuring them there are 'no limits, no intervention'. Madrid has sold off public housing to private equity funds, opposed rental regulation and is promoting mass construction.
