The European Commission has told Spain it needs to do more to tackle the country’s growing housing crisis. In a report released this week, Brussels said Spain should make more land available for building, reduce the long waiting times for building permits, and increase the number of social and affordable homes.

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Housing shortage causing real problems for renters

Finding a place to live has become harder and more expensive for many people in Spain, especially young people and those on lower incomes. According to the report, nearly 40% of renters in Spain are now spending 40% of their income on rent and utility bills, much higher than the EU average of 27%.

Spain also has a serious lack of social housing, with only 1.5% of the total housing stock classed as social rental housing. In comparison, the EU average is 9%.

At the same time, the rise in holiday rentals has made things worse in many areas by reducing the number of homes available for long-term residents.

What Brussels wants Spain to change

Brussels says that in order to fix the problem, Spain needs to:

• Finish the long-overdue land reform
• Speed up the permit process for new builds
• Cut down on red tape
• Increase funding for social and affordable housing
• Solve the shortage of construction workers

It also warned that if people can’t find somewhere affordable to live, it could hurt the economy by making it harder for people to move to where jobs are, especially in big cities like Madrid and Barcelona.

The pros: more homes and better affordability

If Spain follows through on these recommendations, it could lead to a much-needed boost in housing supply. That could help ease pressure on prices, especially in hotspots like coastal regions and major cities.

More homes, especially affordable ones, could make it easier for young people to move out and for lower-income families to live in decent housing. It could also improve labour mobility and help areas that are struggling with depopulation.

The cons: challenges ahead

However, there are some real challenges. The construction sector is already facing a shortage of workers, and rising costs for materials could slow things down further. Local councils may also resist changes to land laws or struggle to approve permits more quickly.

There’s also a risk that pushing too much development too fast, especially in rural or natural areas, could lead to environmental concerns or badly planned housing. The last time Spain leaned heavily into a building boom, thousands of properties were built in inappropriate places, including dry riverbeds, known as ramblas. These areas are meant to carry water during heavy rain, but with homes built on top, some areas now face serious flooding risks during storms.

What it means for the property market in Spain

For buyers and investors, an increase in housing supply could mean more options and, eventually, more stable prices, especially in areas that have seen sharp increases in recent years. For renters, more affordable housing could offer some relief, although it may take time before any real change is felt.

Overall, the EU’s recommendations show that housing is no longer just a social issue; it’s now seen as a key economic one. If Spain takes action, it could help create a healthier, more balanced property market in the long term.

Can Spain Solve Its Housing Crisis Without Tackling Wages Too?

While the European Commission has focused on housing supply, building permits, and construction bottlenecks, many people in Spain argue that there’s a much deeper issue: wages are simply too low. Even if more affordable housing becomes available, a large portion of the population still struggles to make ends meet.

The minimum wage in Spain currently sits at around €1,189 per month. That’s significantly lower than in many other EU countries. For comparison, the minimum wage in France is over €1,700, and in Germany it’s about €2,000. This gap makes it even harder for people in Spain to save or rent without financial stress, especially younger adults and families.

As we previously mentioned, nearly 40% of renters in Spain spend 40% or more of their income on housing and basic utilities, compared to the EU average of just 27%. But many people report the percentage is even higher than that. That puts serious pressure on household budgets and leaves little room for other essentials.

Rising rents, limited social housing, and slow wage growth form a cycle that’s difficult to break. Without addressing income levels, even the best housing policies may fall short. More affordable homes are urgently needed, but so is a broader conversation about wages and job security.