In late June, a law put forward by the Catalan government in Spain to permit rent caps amid soaring prices was rejected by the Catalan parliament.
The block highlights the difficulties Spain faces in reaching a consensus on measures to stop tenants from being priced out of their neighbourhoods and cities.
Housing became a defining issue in Spain in the wake of the crippling 2008 financial crisis that took years to start recovering from.
In a country with historically high home ownership, renting is viewed as a temporary phase for those who are not yet in a financial position to buy, says Alejandro Inurrieta, an economist and author of a forthcoming book on Spain’s real estate market.
Spain’s Institute of Statistics put unemployment for 2018 just under 15 per cent, the lowest in a decade but the second highest in the eurozone. For youth, it’s worse: 34 per cent nationally, and closer to 50 per cent in the regions of Andalusia and Extremadura.
With unemployment, low salaries and unaffordable housing, around 80 per cent of Spaniards under 30 still live with their families, according to the Council for Youth in Spain.
It’s not just younger people who are struggling with high housing costs. On average, families in Spain spend 30 to 50 per cent of their total income on rent or mortgages.
The financial crisis, says Mr Inurrieta, upended the Spanish dream of buying a property, as the country's banks became more stringent with mortgages, and today rarely finance more than 80 per cent of a property’s value. Together with low salaries, many people were forced into the rental market.
Although Spain’s economy has started growing again, a large proportion of the population continues to have difficulty accessing the buying and rental markets, says Beatriz Toribio, head of research at property website Fotocasa.
“The growth rate of prices is much higher than the evolution of the purchasing power of Spaniards, which has barely grown since the crisis broke out.”
However, the latest statistics indicate that the Spanish real estate sector is recovering, says Ms Toribio, with Madrid, Catalonia and the Balearic and Canary Islands leading the way.
Overseas buyers have been important to that recovery, says Barbara Wood of real estate service The Property Finders.
Last year was an all-time record for foreign buyers, up 30 per cent from the pre-crisis peak with over 103,000 purchases, two-thirds made by EU citizens, she says. Despite the devalued pound amid Brexit uncertainty, Britons remained the biggest group of buyers, followed by the French and Germans.
Chinese, Russian and Latin American buyers make up much of the rest, says Mr Inurrieta, although data from luxury property agent Lucas Fox show a surge in Middle East buyers, accounting for 10 per cent of coastal sales last year.
Spain’s golden visa scheme, allowing investors to earn residency for minimum investments of €500,000 (Dh2 million), has grown steadily since it was implemented in 2013.
While foreign purchases are at all-time highs, the real estate market remains difficult for Spaniards to access. In 2018, the domestic market saw 30 per cent fewer transactions by residents than pre-crisis levels, says Ms Wood.
Pushed into the rental market by tighter lending conditions and decreased purchasing power, the heightened domestic demand for rentals eventually coincided with tourism booms in Barcelona and Madrid.
With record-breaking arrival numbers over the past six years, Spain is now the second most-visited country globally.
Once touted as a way for the country to navigate its way out of the crippling downturn, tourism has since tipped out of balance, leaving residents to grapple with changes that have at best caused inconvenience and at worst left locals struggling to afford accommodation.
The tourism boom in Spain’s most popular cities stems from a convergence of factors many trendy European destinations are grappling with: the growth of Airbnb and similar platforms; the rise of budget airlines; and the increasing popularity of city-breaks.
Barcelona is among the most impacted places in Spain, with 20 million visitors descending annually on a city of 1.6 million.
Locals must now compete for accommodation among investors, second homeowners and the short-term rental market geared towards tourists.
At the height of the financial crisis, Cerberus, Blackstone and other investors began purchasing portfolios of mortgage debt and recovered property.
Although many investment funds have since entered the Spanish property market, says Mr Inurrieta, between 90 and 95 per cent of homes are still individually owned. Social housing, meanwhile, accounts for less than 2 per cent.
Short-term rentals offer higher profit margins, up to 10 per cent more than standard long-term contracts, especially in city break destinations that are year-round markets. Consequently, many owners have pulled their properties from the traditional long-term market. With fewer long-term rentals on offer, prices have gone up.
According to Fotocasa data, rental prices in Madrid and Barcelona have now exceeded pre-crisis levels, says Ms Toribio. “And though prices have stabilised in the rest of the country, they continue to rise in both cities.”
One consequence has been a steady stream of evictions: 700,000 across the country since 2013 – the highest rate in the EU, says Plataforma de Afectados por la Hipoteca (PAH), a social movement fighting for housing rights.
Along with gentrification, the short-term rental boom has transformed the face of neighbourhoods across the country. As tourists are ushered in, Spanish families are driven out of neighbourhoods they’ve lived in for generations, fracturing community ties in the process.
Valencia and Malaga, fast becoming popular city break destinations, are now facing the same problems of rising rents and evictions, gentrification and noise. Aware of what has happened in Barcelona and Madrid, officials in Valencia and Malaga are trying to put in place controls before the situation worsens.
A key reason behind the rental price surge is the lack of social housing, says Mr Inurrieta. In the fallout of the crisis, Madrid sold what little public stock it had to investors. Despite making up a small share of the total housing market, social housing had worked to stabilise prices, he says.
Now, social housing makes up around 2 per cent of the total housing market in Spain, far short of the European average of 18 per cent.
To create enough stock to start making a difference in prices would take 15 to 20 years, says Mr Inurrieta, and that’s if the political will is there. With the Madrid city hall about to be back in conservative hands, Mr Inurrieta predicts this won’t happen, and that what little stock remains will be sold off.
In Barcelona, where €647m is being invested to protect the right to housing, it’s a different story.
Last year, the municipal government launched 72 projects within its "Right to Housing" plan to increase the stock of social housing by 50 per cent in the next six years.
Alongside this, other measures include the allocation of 30 per cent of all new build-homes and and major renovation projects to affordable housing; the right of first refusal to the city council to acquire buildings and land plots and the revival of a stalled policy to appropriate from banks properties that have been empty for more than two years.
Until more affordable housing becomes available, local governments are left to try and mitigate the immediate effects on renters through regulations that are proving difficult to agree on. Critics of price controls say they won’t increase the supply of homes for rent and may cause more owners to put their properties on the short-term rental market instead.
Indeed, in May, two months after imposing a battery of national rent-suppression measures for new leases, rents rose at a 7.5 per cent annual pace, according to property website Idealista.com, which supplies data to Spain’s central bank. That was an acceleration from 6.6 per cent in March when the measures were enacted.
The Barcelona Tenants Union says more social pressure is needed to call for greater changes that will have a larger impact.
In the meantime, people who find themselves squeezed out of the market or unable to secure mortgages will continue to pay the greatest price.