‘There are only two families in the world, as a grandmother of mine used to say: the haves and the have-nots.’ Sancho Panza’s line in Cervantes’ famous novel was echoed by socialist Prime Minister Pedro Sánchez on Monday when he worried that Spanish society was rapidly dividing into two classes: ‘Those who inherit properties from their parents and those who have to spend their lives working to pay the rent.’
Spain certainly has a severe housing crisis. Although the fertility rate of 1.3 children per woman is far below the 2.1 needed to maintain population, mass immigration means that every year the country needs to find homes for over half a million more people. But not even half of the estimated 250,000 new dwellings that are needed are being built. Over the last decade, average house prices have soared by 56 per cent – far outstripping the increase in wages. It’s no surprise then that public anger is also rising rapidly.
It’s not clear how much longer Sánchez will be able to cling on or what he can hope to achieve while he does
Social rental dwellings account for a mere 2.5 per cent of the total housing stock; another 1.5 million would be needed to bring Spain up to the EU average of 7 per cent.. Meanwhile more and more existing houses and flats are being converted into tourist accommodation. As a result, young adults in the Baleares, Canary Islands and other tourist hotspots are finding themselves priced out of the property market. William Chislett of the Elcano Royal Institute, an international affairs think-tank in Madrid reports that ‘more than 80 per cent of the population aged between 16 and 29 live at home compared with an EU average of 68 per cent’.
This context points to the futility of Sánchez’s latest ‘blame the foreigner’ proposal which would effectively double the price of houses bought by non-EU residents (many of whom are British) by imposing a punitive property tax of 100 per cent. Annual property purchases by non-EU nationals, after all, amount to a mere 0.1 per cent of Spain’s 26 million homes. This new measure then is no more likely to solve Spain’s acute housing shortage than did scrapping the ‘Golden Visa’ scheme which used to confer residency rights on non-EU citizens who had invested €500,000 (£422,000) or more in real estate; as Mark Nayler predicted in these pages last year that has only affected ‘a tiny portion of sales at the high end of the market’.
Fortunately for the many Brits who have set their hearts on buying property in Spain, Sánchez’s eye-catching proposal is unlikely to become law since his fragile minority coalition government struggles to pass any substantive legislation. After ‘winning’ the general election in July 2023, in order to secure another term in office, Sánchez had to cobble together an unholy alliance including two radical left-wing groups and two right-wing parties. One of the latter, the hard-line Catalan separatist party Junts per Cataluyna, makes no secret of the fact that it has no interest whatsoever in helping to solve Spain’s problems. Instead Junts politicians have labelled Sánchez untrustworthy and one recently ordered government ministers to ‘move [their] arses’ and to try harder to win Catalan recognition as an official EU language.
Meanwhile, another small party, Podemos, has threatened to make its support for the government conditional on the severance of ‘commercial and diplomatic relations with the genocidal state of Israel’. Getting such a disparate hotchpotch of parties, each stubbornly sticking to its own agenda, to agree on economic measures is very difficult; the government failed to pass a budget last year and will struggle to do so this year. There’s good reason then to think that Sánchez’s proposal to impose eye-watering taxes on Brits buying houses may never come to fruition.
In office but not really in power and beset by corruption allegations affecting his inner circle including his wife and brother, it’s not even clear how much longer Sánchez will be able to cling on or what he can hope to achieve while he does. When the parties currently supporting him conclude that they have squeezed all the concessions they can out of him, his government is quite likely to collapse. As Sancho also observed: ‘El pan comido y la compañía deshecha’ (‘When the bread’s eaten up, up breaks the company’).
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