Walter Finch
SPAIN’S two largest cities have been gripped by a dangerous housing bubble since 2023, according to a new academic study that warns of ‘overheating’ in the property market.
Research conducted by three university professors has identified speculative investment and tourism as key drivers behind soaring prices in both Madrid and Barcelona, with rental markets bearing the brunt of the crisis.
The study, titled The Housing Classic: Bubbles in Madrid and Barcelona’s Real Estate Market, was compiled by economics professors from the University of Barcelona, Complutense University of Madrid, and University College Dublin.
READ MORE: Madrid vs Barcelona: Two titanic cities being squeezed in the grip of Spain’s housing crisis
The academics found that both capitals have experienced persistent market imbalances driven by population growth from immigration and a chronic shortage of housing construction.
In Barcelona, researchers identified three distinct bubble phases in the rental market: July 2015 to February 2016, June 2016 to December 2017, and most critically, from August 2023 to the present day.
The study highlights how housing prices have risen far more rapidly than rental prices, creating ideal conditions for speculative investors to swoop in.
These investment funds and wealthy individuals – both often from abroad – are now competing directly with ordinary families for properties.
According to Enric Aragonès from the Tenants’ Union (Sindicat de Llogateres), buying a home now requires more than seven years’ full salary – the highest amount since the 2008 mortgage crisis.
Perhaps more strikingly, 60% of home purchases are now made without mortgages, whilst over half of Barcelona’s property transactions involve owners with eight or more apartments.
Tourism has played a significant role in driving demand, particularly in rental markets where immigrant populations are most present.
The constant pressure from tourist arrivals has created sustained upward pressure on prices, whilst housing supply has failed to keep pace with demand.
READ MORE: Malaga continues to hand out new tourist apartment permits despite housing backlash
The researchers warn that speculative investors who acquire properties purely for profit rather than personal use are ‘reinforcing the risk of market overheating’.
This dynamic has been particularly noticeable over the past two years as credit prices have fallen and speculative capital has flooded into Spanish property markets.
Recent events have highlighted the scale of the problem.
Residents from six Barcelona apartment blocks recently organised protests against Vandor, a listed investment company that has acquired 14 buildings containing 200 apartments in the Catalan capital. Tenants claim the company is systematically evicting residents to convert properties into student co-living units.
The Tenants’ Union is calling for a ban on speculative apartment purchases, particularly in stressed areas, alongside expanded public housing provision.
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Currently, Catalonia’s public housing stock sits below 2%, despite regional regulations requiring a minimum of 15% by 2027.
Aragonès argues that rental price controls, similar to those already implemented in Catalonia, should be extended to tourist and seasonal apartments.
The union advocates for a comprehensive approach combining price limits, speculation bans, and expanded public housing provision.
The study’s authors, meanwhile, recommend prioritising the rental market, where current tensions are most acute and ultimately impact the broader sales market.
They suggest that social rental housing promotion could act as a buffer against speculative pressure.
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As complementary measures, the researchers propose policies encouraging mobility to lower-density areas through improved transport, services, and infrastructure.
Such initiatives could reduce demand pressure in stressed markets like Madrid and Barcelona, potentially curbing the dynamics that fuel property bubbles.
The findings come as Spain grapples with a housing affordability crisis that has sparked protests and political debate across the country.
With both rental and purchase markets under severe strain, the research adds academic weight to calls for urgent policy intervention to address what many see as an unsustainable situation.
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