Ireland’s economic fortunes have been mirrored by those of Spain for some years and now the two countries are facing similar housing crises.
A lack of affordable housing has become a major concern for Spaniards as rental rates, particularly in large and medium-sized cities, have risen steeply, outstripping salaries.
A flat in Madrid costs on average €1,500 per month, with a typical Spanish salary worth €23,568, according to Eurostat. (In Dublin, average rental has hit €2,476 per month, according to property website Daft, although wages are higher at €43,151).
A major reason for the rental spiral in Spain is a lack of investment in new homes. The national statistics office estimates that at least three million homes need to be built over the next 15 years to house a population whose growth is driven in great part by immigration. The current rate of construction is a long way off that figure.
Last summer, Spain’s housing predicament was closely linked to its ongoing tourism boom. With short-term, Airbnb-type tourist accommodation proliferating in the centres of many cities, pushing up rentals in those areas, local people protested.
[ Housing remains a big problem, but I worry the real disaster lies aheadOpens in new window ]
The country’s socialist prime minister, Pedro Sánchez, has now responded to the emergency by unveiling a barrage of measures. They include apportioning land for the building of affordable homes, ensuring that public housing does not end up in the private market, tax breaks for owners who rent out their properties but higher taxes for owners of tourist properties, and limiting the purchase of property by non-residents from outside the EU.
In unveiling his measures, Sánchez warned that average property prices have increased by 48 per cent in the EU over the last decade, creating “the biggest problem for the middle and working classes in Spain and Europe”. It will soon become clear whether his approach to that conundrum is one that other countries will want to follow.
- Sign up for Business push alerts and have the best news, analysis and comment delivered directly to your phone
- Find The Irish Times on WhatsApp and stay up to date
- Our Inside Business podcast is published weekly – Find the latest episode here
