Faced with a housing crisis that mainly affects young people are Portugal and Spain, whose governments are promoting measures to strengthen social housing and make properties available at much more affordable prices. High rent prices, the cost of borrowing mortgages and the prohibitive prices of real estate are not only a problem for Spain and Portugal, but also for the whole of Europe, since the cost of housing compared to incomes is burdensome in many countries. According to estimates cited in a related publication by the Financial Times, social housing represents approximately 2% of the housing stock in Portugal and 1%-3% of all housing in Spain, a percentage lower than the European average (7.5% ). The difference is even more noticeable if the above percentages are compared with the corresponding ones in France (14.5%) and Britain (17%).
The figures, also according to the British paper, show that public housing has only been a sporadic political priority on the Iberian Peninsula since its dictatorships collapsed in the 1970s.
In this context, Madrid is studying the possibility of taking advantage of the bad bank born of its most recent financial crisis to create up to 50,000 units of social housing, while Portugal is looking for solutions to deal with the ever-increasing housing costs . According to the British paper, Spain’s cabinet is set to approve a plan to boost the national stock of 290,000 social housing units by 17% using properties from its bad bank, which was set up in 2012. The bank was set up to clean up toxic lenders’ assets in the wake of a housing bubble that burst four years ago.
For his part, Spanish Prime Minister Pedro Sanchez said the move would tackle “a huge and genuine problem” by making more homes available at fair prices especially for young people. “Housing in Spain is a constitutional right, but not a real right. Young people have to wait an unacceptably long time to access housing and become independent,” he said. The severity of the problem was underlined on Monday by new data from property company Fotocasa, which showed that rental prices in Spain hit a new record high in March, up almost 10% from last year, at €11.55 a month per square metre.
Aggressive rate hikes by the European Central Bank over the past year have pushed borrowing costs for mortgage holders to their highest level in a decade.
Portugal’s government last year approved €2.4 billion in investment plans aimed at developing public housing by the end of 2026. At the same time, it presented a housing bill to Parliament last Friday that would allow the state to convert vacant private properties in social housing. “This is a problem facing the whole of Europe, so we need to come up with new answers,” Marina Gonsalves, the minister responsible for social housing, told the Financial Times. In recent years, municipalities and regions have not had much scope for additional spending due to the fiscal costs of the financial crisis, which in 2008 had its roots in the “bubble” of the real estate market.
Thus, the two countries’ Socialist-led governments have recently been promoting broader reforms to make private property markets fairer, while recognizing that social housing is vital.
Spain plans to sell 21,000 empty properties from its “bad bank”, known as Sareb, to regional and municipal governments so they can turn them into social housing. The final part of her plan is to allocate vacant land owned by the bad bank – which is majority owned by the government – to build 15,000 new social home.
