Spain approves a plan to ease its housing crisis

MADRD (AP) — Spain's government on Tuesday approved a sweeping plan to alleviate the country's housing problem, one of Prime Minister Pedro Sánchez ’s main political vulnerabilities ahead of elections next year.

Rising rental and housing costs are pricing many Spaniards out of the market, despite a recent economic boom. Incomes have failed to keep up. Analysts say tourism and population growth in cities driven by immigration have further strained supply.

The new plan, worth 7 billion euros ($8.23 billion), triples government investment in public housing over the next four years. It ensures that subsidized housing cannot be reclassified after a few years. It also includes help for young renters and home buyers.

“It is a significant step forward. For the first time in decades, there is a serious budgetary commitment,” said Raluca Budian, associate director of the Observatory for Decent Housing at the Madrid-based Esade business school.

About 40% of the money will be earmarked for growing the public housing supply, which Spain lacks compared to the European average, while 30% will be set aside for property renovations, the government said. That will include funds for making homes more energy-efficient and building in depopulated parts of the country.

The rest will go toward subsidies, with a focus on young people.

“The public is demanding an agreement to address the main problem currently affecting them,” Housing Minister Isabel Rodríguez said Tuesday. Housing routinely comes up as Spaniards' top concern, according to state pollster CIS.

Housing costs in Spain rose nearly 13% year-on-year at the end of 2025, according EU statistics agency Eurostat.

Spain ranks near the bottom of Organization for Economic Co-operation and Development countries with public housing for rent, with under 2% of available supply. The OECD average is 7%. In France, it is is 14%, Britain 16% and the Netherlands 34%.

In the past, Spain built housing with public funds that later passed into private ownership. Once they were sold, they disappeared from the public housing stock.

Associated Press journalist Joseph Wilson contributed from Barcelona.