Low rentals and high purchasing: housing is now a double-suffocating market.

BarcelonaFor many, housing isn't in crisis. Not because it isn't a problem now, but because they believe it has always been. It's structural, they say, like the struggle to pay rent or the possibility that, from one day to the next, someone will knock on your door to evict your neighbor or, less fortunately, your entire family. Both those who want to change the rules and those who think building more is enough face a reality as new as it is undeniable: an overlapping crisis that further aggravates access to housing.

If at the beginning of the century the problem was mortgages and the financial bubble, after the pandemic it was the endless escalation of rent prices. And now, more than fifteen years after the real estate crisis, with rents controlled but still under pressure, the perfect storm is brewing. Accessing or paying rent is more difficult than ever, but buying a home is practically as well. In Barcelona, there are virtually no affordable regulated rental apartments: you either accept seasonal contracts or chase after very limited offers. Of the 5,200 rental listings in Barcelona on Idealista, if you're looking for a two-bedroom regulated rental apartment for less than €1,000, you'll only get one. It's true that the price of new rental contracts has dropped, and that tenants are becoming more established in their homes and fewer new contracts are being signed. But it's also true that in Barcelona, the price per square meter of regulated contracts has been rising for two quarters while the surface area of apartments has been falling.

The most recent reality, which is what has turned the housing market into a double-dip suffocation, is the escalation of transactions—which has been seen later with the signing of mortgages—and the almost parallel increase in housing prices. In the first quarter of this year, housing prices in Catalonia surpassed their all-time high, reached in the second quarter of 2007. This was thanks to an 11.7% price increase compared to the same period in 2024.This is also the largest increase recorded since 2007–The value of homes in Spain already broke this record a year ago, also set during the real estate bubble. Transactions reached their all-time high earlier, in October 2024, with 8,683 transactions. Over the past few years, the market has been gaining momentum, 2022 was already the best of the previous 15 years., and in 2023, despite slowing down the pace, was above pre-pandemic years.

The push of the types

What has ended up shooting up mortgages –which are also at their highest levels in the last 15 years– is the push of the European Central Bank (ECB), which, with the interest rate reduction policy initiated in June 2024, has lowered the price of money and, by extension, the 12-month Euribor—used as a reference for fixed-rate mortgages—and also the IRS (interest rate swap) for fixed-rate mortgages. Most market mortgages are variable-rate, but the majority signed now are fixed-rate.

"From January to June, mortgages rose 23.9% in the first half of the year compared to last year, but they grew more in recent months – May and June saw increases of over 30% – and, in general, it must be taken into account that there are more mortgages in the second half of the year," the managing director explained to ARA. Trioteca mortgage company, Ricard Garriga. "Why does this happen? Historically, banks balance their books in the last part of the year. Those with excess targets hold back on granting loans, that is, they raise prices, and banks that say they're not up to scratch make brutal offers in the final quarters," adds Garriga. This scenario, with interest rates at 2%, allows demand to remain high in the coming months, leading to another scenario: the maintenance or increase of these record prices.

Cumulative changes in the housing market

Percentage change in price and number of rental and sales transactions since the first quarter of 2023

The perfect storm

The truth is that several factors are driving the buying and selling market upward. Beyond the cheaper credit, there are internal reasons, such as the shortage of new construction, which is causing demand to concentrate even more on second-hand housing, which is precisely growing in price much faster than new construction. But there are also external factors, and this is where the tension in the rental market comes into play: tenants see they are paying a lot of money each month, which makes them consider buying when otherwise they wouldn't. Thus, between mortgages, forecasts of rising prices, and unaffordable rents, demand is skyrocketing—and was already strong in 2022 and 2023—without the need for mortgages, either due to foreign purchases or family financial support, as is often the case, since young people's savings capacity is insufficient to afford a buyer.

"The housing stock hasn't increased in recent years because new housing is replacing obsolete housing; there's no real incorporation of housing. This puts a strain on the market. Those left out of the market are those with weaker economies: young people and immigrants," explains Barcelona's manager Gorgues to ARA. He also highlights that the arrival of foreigners—whether they have high or low purchasing power, whether they're here to live or spend time—also puts a strain on supply.

And in scenarios like this, beyond the economic or demographic factors outlined, experts also talk about a psychological component that's influencing the decisions of many buyers: FOMO. (fear of missing out, in English) or "fear of being left out." An element that, for the professor of economics at the University of Barcelona, ​​​​Sergi Basco, who has published studies on the effects of real estate bubbles, asserts that demand driven by this fear is a key indicator of a price bubble. "In fact, Nobel Prize-winning economist Robert J. Shiller conducted a study on how a bubble could be inferred from the reasons people buy homes, and one of them was the fear of missing out," he explains to ARA.

The Catalan case and the Barcelona exception

In the city of Barcelona, ​​a paradigm of rental price caps, a state regulation primarily applied in Catalonia, there is another logic that feeds into this dynamic: the incentive for owners of large apartments to sell is greater due to rental regulations. "This is what happens in Barcelona. As soon as the contracts end, the owners sell these homes, which has led to an increase in the supply of properties for sale, an exceptional case, because this is not the case in the rest of Spain," says Garriga.

In fact, the correlation between the rental market and the sales market can be seen in the data (see graphs). In the city of Barcelona, ​​​​in the municipalities declared as tense areas in March 2024 and in the rest of Catalonia, when the rental regulations came into effect, rental prices and the number of new contracts began to decline, while from the same moment, the sales market experienced just the opposite. Prices rose, and so did the number of transactions. However, it should be noted that prices were already on the rise, and that outside of Catalonia—where the price cap is barely applied—housing has also become more expensive.

Spain leads the way in housing price increases

According to data from Eurostat and the Bank of Spain, the rise in housing prices in Spain is exceptionally high. In the first quarter of 2025, the year-on-year increase was 12.3%, well above major European economies, such as France (0.6%), Germany (3.8%), Italy (4.4%), and the United Kingdom (2.7%), and even global economies, such as Japan (1.2%) and the United States. In fact, the gap between Spanish and other price increases is increasing, even in the Netherlands. In Europe, only Portugal, Bulgaria, and Croatia have higher figures than Spain.

The implications of all this also affect the market status of housing: while housing profitability—which includes rent plus price variation—is skyrocketing, reaching its highest figure in recent years (15.4%), gross rental profitability has remained stagnant and has been declining in recent years. This indicates that it's rising housing prices, not so much rent prices, that's driving profitability.