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pain's real estate market is experiencing a significant boom, with property prices rising by an average of 9% in the first nine months of the year. This surge has led to concerns over housing affordability, particularly in cities like Madrid and Barcelona where rents have increased by 25% and 33% respectively over the past five years.
The issue has sparked public unrest and mass protests across Spain's major cities, prompting Prime Minister Pedro Sanchez to propose a 100% tax on property purchases by non-EU nationals without residency in Spain. However, critics argue that this measure may not address the root cause of the problem, as speculators make up a small proportion of buyers.
Mark Stücklin, who runs the Spanish Property Insight website, claims that there are "no speculators" in the Spanish property market due to high transaction costs and red tape. Instead, foreign demand has grown sharply since the COVID-19 pandemic, with nearly a fifth of homes sold being bought by foreigners.
Foreign buyers have driven up prices, particularly in coastal cities like Valencia and Alicante, where housing stock is under pressure due to limited availability and fast-growing populations. Rent controls introduced in Barcelona last March helped stabilize prices but did little to address the supply shortage.
The opposition conservative Popular Party (PP) has proposed easing the tax burden on property sales and offering 100% mortgages to buyers under 40. They also plan to free up land for new affordable housing in areas with high demand.
Other countries have implemented measures to deter foreign buyers, including Singapore's 60% tax on certain types of property and Hong Kong's extra 15% stamp duty. Switzerland has annual quotas on home sales to nonresidents, while Denmark requires government approval before foreigners can buy properties.
Experts believe that governments are trying to balance attracting investments with ensuring housing remains affordable for locals. These measures have made many countries less prone to boom-and-bust cycles and may become more common in the future as governments face high public debts.
