Why the rise in housing prices in Catalonia has become a European exception

BarcelonaWhat most determines the evolution of housing prices? Is it excess demand, a lack of supply, or the use of the property? What conclusions can be drawn from how the value of apartments and houses in our country has increased over the last twenty years? And the last five? Will building more lower prices? And does capping rental prices have any future beyond a limited period?

The answer to all these questions is complex. Multifactorial, as the experts would say. So much so that there is no consensus, even with the data at hand. The proof? Two recent studies They offered different conclusions a few days ago. Faced with the same question: Is home ownership really concentrated in Barcelona?

But despite the difficulty of finding answers, and even more so of reaching a consensus – we have seen at the rent cap, but also in the act of building—, the analysis of the statistics compels us to ask more questions. In Catalonia, throughout Spain, and in much of Europe, housing market prices have skyrocketed compared to other fundamental economic variables, such as wages and inflation. The proof is on the street: evictions, residents forced to vacate entire buildings, and a saturated rental market where finding an affordable apartment is virtually impossible. Access to housing has steadily worsened for those seeking a new home.

Precisely by comparing the different trends in housing prices and inflation, a question arises: why do Catalonia and Spain as a whole exhibit different behaviors compared to the rest of the major European economies? Why, in the last five years, have rental prices risen less than property prices relative to the consumer price index?

This is how housing prices have risen

BUYS

RENT

Catalonia, a European exception

Housing prices in Catalonia, and indeed throughout Spain, have risen faster than inflation over the past five years. Since 2020, the cost of buying a home has increased by more than 35%, while the Consumer Price Index (CPI), calculated from a weighted average of various products and services—including rent—has risen by just over 20%. In other major European economies, such as Germany, France, and Italy, the opposite is true: in the last four or five years, inflation has risen considerably faster than housing prices. But that's not all. Catalonia and Spain as a whole also show a different trend when we replace purchase prices with rental prices and compare them to the CPI. While in most of Spain's neighboring economies rents are rising faster than inflation, in Catalonia and the rest of the country the opposite is happening: renting an apartment hasn't become as expensive as the basket of goods and services included in the Consumer Price Index (CPI). This contrasts with the problem facing the rental market in large cities, which has grown significantly in major population centers like Barcelona and Madrid, but also in medium-sized cities. In the last five years, rental prices in Catalonia have increased by 7%, but inflation has risen by 21%, driven first by the pandemic and then by the war in Ukraine. Since 2007, inflation has risen by 45% in Catalonia and rents by 27%, according to data from the National Institute of Statistics (INE). The psychology of "bricks and mortar"

One of the keys to understanding why Spain moves at a different pace than the rest of the continent lies in the 2008 crisis. The housing credit bubble—mainly for construction, but also for purchases through mortgages—had devastating consequences for Spain's construction sector, which was particularly dismantled. According to Xavier Brun, professor of the Master's in Financial Markets at the Barcelona School of Management (UPF), this has left a legacy in Spanish society that sets it apart from the rest of Europe. "In Spain, the vast majority of people own their own home. Unlike Germany, where I believe it was around 40% of people who owned property, in Spain it was around 70%. And if there is traditionally more demand for purchases, the price has to be higher," he reasons. But this culture of homeownership is not just a matter of status, but also a structural form of saving. "People say they are going to play "To the stock market, not to investing," reflects Brun, who points out that in Spain there is a historical distrust of equities. This pushes savers towards the real estate market, seen as a tangible and safe asset. When any surplus is available, the demand for purchases becomes higher than in countries with more mature financial markets. ~BK_

To understand why the last five years have been so bullish in our country compared to Europe, we need to look further back. An expert in the sector—who prefers to remain anonymous due to political responsibilities—recalls that Spain suffered a freefall between 2007 and 2015, which wasn't as severe in the rest of the major European economies, with the exception of cases like Ireland. "We hit very low and had a long way to go to recover," explains Òscar Gorgues, manager of the Barcelona Chamber of Urban Property, along the same lines. This would also explain the sudden acceleration of the last five years: what we're seeing now is not just a price increase, but also a "rebound effect" from a crisis that was devastating here and kept prices artificially low for almost a decade, Gorgues argues. Population explosion and tourist magnetism

But not everything is a legacy of the past. Catalonia's population growth has exceeded expectations. Since the pandemic, the region has experienced a population explosion that, according to Gorgues, "radically absorbed the housing stock," after having previously enjoyed sustainable and balanced growth. This population increase, driven by economic immigration and new high-income profiles, has encountered a rigid supply market.

"After the Olympics, during a period of high supply and low demand, the housing stock improved significantly because owners competed and invested to have good apartments and avoid having them vacant. We had the same situation with the financial crisis. That's why so many tourist licenses were issued, to bring the stock to market. The owners.

This trend has multiple facets. Brun recalls that starting in 2012 and 2013, wealthy foreign investors came here to buy apartments, encouraged by measures such as golden visas. "I'm talking about cases of rich people from Latin America who, due to proximity and climate, came to Spain, and not to the rest of Europe," Brun points out.

Cheap money and housing as a refuge

Within this storm, the rental market—despite the feeling of being suffocated—has behaved more moderately in relative terms compared to sales in much of the country. Why?

This is where the effect of monetary policy and cheap money comes in: until very recently, Europe experienced a period of historically low interest rates. In this regard, Gorgues points out that mortgage payments in 2025—often at a fixed rate—were cheaper than those before the 2008 crisis. This has facilitated buying and put upward pressure on sale prices.

Josep Soler, executive advisor of the Spanish Association of Financial Advisors and Planners (EFPA), also notes, like Gorgues and Brun, that intervention in the rental market has had a kind of boomerang effect: many landlords, faced with a sense of legal uncertainty or the limitations on tourist or seasonal rentals, are either putting their properties up for sale or simply doing so. This reduction in rental supply doesn't always mean lower prices, but it does create a distortion that keeps the purchase market as the primary safe haven.

Wages (and commuter rail), the great forgotten ones

Gorgues, however, points further: "The feeling isn't that prices are rising, but that wages aren't." The rising cost of housing is unbearable when combined with an increase in the cost of living (such as food and energy) that the CPI doesn't always fully reflect for low-income earners, who are more exposed to the increase in these two components. Between 2007 and 2025, the cost of a basic food basket in Catalonia rose by around 40%. If wages remain the same and rent increases, the result is the systemic impoverishment of the "poor and extremely poor" segment of the population. Furthermore, the housing problem isn't just about bricks and mortar; it's also about railway lines. The malfunctioning of infrastructure like the commuter rail system is fueling Barcelona's gridlock. "Who's thinking about living outside of Barcelona now?" asks Soler. If you cannot guarantee fast and efficient transportation, demand will concentrate in the capital and its surrounding area, causing prices to defy any inflationary logic.

However, while the market in Europe has been cooling down due to rising interest rates, the Spanish and Catalan exception can be summed up as a perfect storm: a savings culture based on property ownership, a later and steeper post-2008 recovery than the European one, a chronic lack of supply aggravated by administrative slowness, and a territorial imbalance.