Spain’s Housing Crisis Is Exploding Into the Streets

by Martin Armstrong

Spain’s housing crisis has finally exploded into the streets. Tens of thousands marched through Madrid after an 87-year-old disabled woman, Maricarmen Abascal, was removed from the apartment where she had lived for more than 70 years. Police battled protesters trying to stop the eviction, and Maricarmen was ultimately carried from the building on a stretcher and taken away by ambulance. Protesters have now erected tents in Puerta del Sol, turning one woman’s eviction into a national symbol of a housing system that is breaking down.

The Bank of Spain estimated that the country was already short roughly 550,000 homes last year. Spain has experienced enormous pressure from tourism, short-term rentals, population growth, immigration, and years of inadequate housing construction. Madrid, Barcelona, Málaga, the Balearic Islands, and other desirable areas have seen housing costs move far beyond what ordinary wages can support. This is what happens when demand expands much faster than supply. Politicians can pass all the laws they want, but they cannot repeal economics.

Maricarmen became the face of this crisis because her case is so brutal. She had lived in the apartment for 71 years. After the building changed hands, she was offered the opportunity to purchase the apartment for €247,000, an impossible amount for a pensioner. Her rent had been €500 per month and was subsequently raised to €1,650 while her pension was reportedly only €1,350. The landlord ultimately prevailed in court over the validity of the old tenancy arrangement, and after several attempts to prevent the eviction, she was physically removed.

Now everyone is furious, and naturally the politicians are scrambling to prove that they can fix the problem they failed to prevent. Prime Minister Pedro Sánchez has promised another housing decree with stronger tenant protections and restrictions on evictions. His coalition partners are going even further. Sumar has demanded that the government expropriate Maricarmen’s former apartment so she can return to it, although another government minister has questioned whether such a move clearly fits within Spain’s constitution. Protesters are demanding rent freezes, restrictions on investment funds, stronger eviction protections, and still more government intervention in the housing market.

You cannot solve a shortage by making housing less attractive to build, finance, rent, or own. Housing is unaffordable, therefore punish the landlord. Rents are rising, therefore control the rent. Investment funds purchase buildings, therefore prohibit them from buying property. A tenant is evicted, therefore expropriate the apartment. Every solution attacks the symptom while politicians refuse to understand why people can no longer afford housing.

Spain needs more construction, more investment, faster permitting, available land, infrastructure, and an economic environment where developers can actually make a return for taking the enormous financial risk of constructing housing. If the political response to a shortage is to threaten landlords with rent controls, expropriation, restrictions on ownership, and increasingly difficult eviction procedures, capital does not magically volunteer to build millions of additional apartments. It goes somewhere else.

This is the same mistake governments make every time they interfere with markets. They see the price and assume the price is the problem. The price is the message. Rising rents are screaming that there is insufficient housing relative to demand. Suppressing the price does not manufacture another apartment any more than imposing a price ceiling on bread creates more wheat.

Spain’s population has been growing while housing construction has failed to keep pace. Immigration is not the sole cause of Spain’s housing crisis, nor are tourists, Airbnb, investment funds, or landlords. But every person requires somewhere to live. You cannot continuously increase housing demand while failing to increase supply and then act astonished when prices rise.

This is why the demonstrations in Madrid are so important. Housing is becoming a political fault line throughout Europe because younger generations increasingly believe the economic system has locked them out of ownership. Their parents purchased homes on ordinary salaries, often with only one working parent. Today young people can work full-time, pay enormous taxes, and still struggle to rent a small apartment without roommates. They are postponing marriage, children, and family formation because housing has become unaffordable. That has enormous consequences for Europe’s already disastrous demographics.

Watching an 87-year-old disabled woman being carried from the home she occupied for seven decades while protesters clash with police is precisely the sort of image that destroys confidence in the political system. But emotion does not change the underlying economics. Spain can confiscate Maricarmen’s apartment tomorrow and it will still be short hundreds of thousands of homes.

We are watching this same mentality spread across Europe. Britain is expanding powers allowing councils to take control of qualifying homes left empty for only six months. Spain’s governing coalition is openly debating expropriating a privately owned apartment. Rent controls and restrictions on landlords are spreading while governments simultaneously complain that there is not enough housing. These policies will not remain isolated because every socialist government eventually discovers the same convenient solution to scarcity: when government cannot provide enough, it begins telling private citizens what they may do with what they own.

Spain’s housing crisis is not going away because somebody passes another decree in Madrid. The Bank of Spain’s estimated shortage is measured in hundreds of thousands of homes. That cannot be solved with slogans, rent controls, or confiscating apartments one at a time. You either increase supply or continue fighting over the supply that already exists.

Madrid is showing us what happens when politicians choose the latter. Tens of thousands of people are already in the streets, tents are appearing in Puerta del Sol, and an 87-year-old woman has become the symbol of a generation that no longer believes housing is within reach. Governments should be very careful. Once people conclude that working harder will never allow them to own a piece of their own country, the housing crisis stops being about real estate. It becomes a crisis of confidence in the entire political and economic system.