What’s Really Behind Spain’s Housing Crisis? Clue... It Didn’t Start With Airbnb

It Didn’t Start With Airbnb

It would be easy to blame the tourists and the “evil Airbnb landlords.” But this oversimplifies a much more complex situation.

When I arrived in Málaga, a family member who had lived here more than 30 years ago told me that the port, until about 15 years ago, was “just drug dealers and dead cats.”

Malaga port in the past and now

Today, the city tells a very different story — one of rebirth and renaissance. It’s now a hub of museums, culture, and creative energy. The ongoing gentrification — a double-edged sword — brings both major investment and steadily rising prices. That makes it tempting to place the blame squarely on tourism. But let’s look at the numbers.

It’s often claimed that half of Málaga’s rental stock has become short-term lets, prompting the local government’s decision to ban new tourist licences in 43 neighbourhoods.

However, according to a report by Urbanismo, these licences account for about 8% of total housing stock — not the 50% often cited. In fact, short-term rentals are capped in zones where they exceed 8%, and areas with 4.53–8% can only add new licences up to that threshold (source).

Málaga city, traditionally working-class and residential, was once a world apart from the rest of the Costa del Sol — unlike Marbella, which has always catered primarily to international tourism.

Between the end of 2023 and 2024, the number of digital nomad visas issued in Spain nearly tripled — from around 9,568 to 27,875 — including family members (source). Many of these visa holders are likely attracted to the Costa del Sol over other regions. Yet in a country of 47 million, this remains a niche influx rather than a mass migration.

So if it didn’t start with Airbnb, and nomads aren’t the main issue, what’s really driving the housing crisis?

A typical Malaga 'lujo´(fancy in Spanish) Airbnb

Why Franco Wanted a Home-Owning Bourgeoisie

Our present carries the imprint of how past rulers gripped and wielded power. Francisco Franco ruled Spain as a right-wing military dictator from 1939 to 1975.

Franco sought to eliminate socialism in all its forms. Alongside the systematic repression, torture, and execution of dissidents, he enforced a patriarchal society in which people were expected to work hard, obey, and lack the time or means to question the status quo.

Veiled women in the procession of the Virgin of Carmel, patron saint of seafarers. San Cibrao (Lugo, Spain), 16 July 1954. (Photo Library: Fototeca do Concello de Cervo).

Under his regime, women required their husbands’ or fathers’ permission to work — a policy known as the permiso marital — and were largely restricted to roles like teachers, nurses, or secretaries. Most households depended on a single male income.

If you were working hard to pay off a mortgage, Franco believed, you would have no time or energy for revolution. The father’s word ruled the home. If he hadn’t been imprisoned or silenced for liberal leanings, he may have quietly supported the regime — or at least chosen not to challenge it.

Until 1975, women had no financial autonomy without male approval. This reinforced a patriarchal system in which the male head of household held legal and economic control. Multi-generational living remained the norm — even today, it’s common for adult children in their 30s to live at home, a surprise to many of their Northern European counterparts.

Renting was discouraged. Spain still has one of the highest homeownership rates in Europe, with around 75–78% of people owning their homes. Franco believed that social and affordable housing could empower the working class — and potentially give leftist ideals too much influence. Better, in his view, a tightly controlled stock of private housing, owned by obedient citizens with a stake in the system.

Housing policy remained rigid even as Spain transitioned into a modern market economy. Regulations that could have guided development where housing was most needed were often poorly implemented — or ignored. This legacy remains one of the major structural obstacles in Spain’s housing crisis today.

Geographic Realities: The Doughnut Problem & Coastal Pressure

The housing affordability crisis isn’t unique to Spain — it’s a global issue. But in Spain, several specific geographic and economic factors make it particularly acute.

Cities like Madrid, Barcelona, San Sebastián, and Palma de Mallorca have seen sharp rental increases. In 2024, the national average rent rose by 11.5%, reaching €13.50 per square metre. In some urban areas, this rises to €23.40/m² — making a 100 m² flat cost around €2,340 per month (source).

Spain consistently ranks among the world’s best places to live — and Málaga even took the top global spot in 2023. With its continued popularity as a place to live and visit, demand only intensifies. By 2040, Spain is predicted to overtake France as the world’s leading tourist destination.

In larger cities, some residential stock is held by institutional investors — such as fondos buitre ("vulture funds") or SAREB, the government-backed entity created after the 2008 financial crisis. These properties are often held as long-term investments, and in some cases, sit unoccupied, further reducing available supply. Add to this the rise in second-home ownership and properties held as holiday lets, and the result is a high demand environment with a limited supply of long-term, accessible housing.

Suburban and outlying areas are developing, but often at a slower pace — with infrastructure and job opportunities still catching up to demand.

Seeing Spain at night is one of the best ways to understand ´the doughnut´

Then there’s the geography. On paper, Spain may look like it has endless space — but in reality, most of the population lives in coastal regions or around Madrid, forming a kind of geographic “doughnut.” Between the coast and the capital lie mountain ranges, natural parks, and land that is either protected or difficult to build on. These are also the most desirable areas — coastal cities, seaside resorts, or the vibrant cultural capital of Madrid.

Much of Spain’s land simply cannot be developed — its sierras, deserts, and forests are part of a rich and diverse landscape that’s protected for good reason. This puts additional pressure on the limited areas where new housing can be built.

Even where land is available, zoning, permitting, and infrastructure planning can be slow and bureaucratic — further limiting new development.

In a market driven by return on investment, development tends to follow the strongest demand — often from international buyers rather than local residents. While this dynamic fuels growth, it can also shift the focus of new builds toward the premium end of the market — one of the reasons property values along the Costa del Sol continue to rise.

Legacy of 2008: A Boom, a Bust, and What Changed

The 2008 crash remains a key turning point in Spanish real estate — especially for buyers who lived through it.

During the early 2000s, development soared. Inland ghost towns appeared as thousands of homes were built — often in places where long-term demand never materialised. The focus was largely speculative, driven by loose credit and eager investors.

When the global financial crisis hit, the housing bubble burst. Construction halted, banks foreclosed on buyers, and thousands of units sat empty. Many developments were never completed.

Recovery has taken time, but the housing market today is shaped by those lessons. There’s greater focus on location, long-term value, and economic resilience. On the Costa del Sol, where demand remains strong, property has rebounded especially well — attracting buyers who see both lifestyle and investment value in the region.

The shell of a development which was never completed in the Torrequebrada area of Benalmádena Costa.

Empty Homes: The Myth vs. Reality

One of the most persistent myths in the housing conversation is this: how can Spain have a housing shortage when an estimated 3.8 million homes sit vacant? Surely that could solve the crisis overnight — or so it seems.

But as with most things in real estate, the truth is more complicated.

Many of these homes are, in reality, uninhabitable. Structurally outdated — often built more than half a century ago — they would require major renovation to meet today’s living standards. Others are caught in long inheritance disputes, with families unable to agree on selling or renovating. In many cases, owners are simply unwilling — or unable — to invest in the work required.

In more rural or economically stagnant regions, vacant homes are often located in areas that lack the jobs, infrastructure, or amenities to attract new residents.

A portion of empty housing stock is still held by banks or investment funds, remnants of the post-2008 era. In some cases, properties are held — by both institutional and private owners — as long-term value stores, without the complications of renting them out.

As with most housing issues, this isn’t black and white — and there’s no single action that can unlock millions of homes overnight.

Housing protests in Plaza del la Constitución, Malaga

Final Thoughts

Spain’s housing challenges are layered — tied to legacy systems, geographic limitations, and shifting global demand. But they also help explain why property in sought-after areas like the Costa del Sol continues to be a solid long-term investment: because the very factors that constrain supply also help maintain value.

Up next: Part 2 — Can Spain Build Its Way Out? Policy, Permits & Possibility

Lets go into the present and the future and explore the roadblocks and opportunities in new housing development, from zoning and permits to Spain’s evolving urban strategy.