Solving the European Housing Crisis: Lessons from GRI Club Meetings in Iberia

Written by Jorge Aguinaga

The European housing crisis continues to present a multifaceted challenge, with market leaders reiterating the urgent need for solutions amid affordability issues driven by rising prices and supply shortages, and nowhere is this more evident than in Spain and Portugal.
 
As discussions at recent GRI Club events confirmed, the key obstacles shaping both markets include limited land availability, elevated construction costs, and the evolving role of local authorities in development financing. 

Given this situation, innovative approaches and comprehensive, coordinated policy interventions are critical to ensuring a more adequate, affordable, and sustainable housing market.

Spanish supply strains

Spain is in the midst of a significant housing crisis, driven by a rapid rise in housing prices and rents that have surged by as much as 80% over the past decade, and exacerbated by supply-demand imbalances, tourism-driven demand, speculation, high production costs, and limited access to developable land.

While the country actually boasts approximately four million vacant homes, they are predominantly located in low-demand areas, far from key urban centers like Madrid, where the need for affordable housing is most acute. 

Discussions at the Spanish Affordable Housing Club Meeting, co-hosted by Urban Input and Bialto, revealed that the surge in property values and rental prices, with increases of 68% and 70% respectively in Barcelona alone, will further exacerbate this situation.

Addressing this crisis requires coordinated efforts between public and private stakeholders. The Spanish government has introduced measures such as the Community of Madrid’s Plan Vive, which aims to deliver 8,500 affordable rental homes. 

However, it was observed that these efforts will not be sufficient by themselves, and Spain must explore additional regulatory and financial instruments to mitigate housing affordability pressures.
 
At the same time, the country is taking decisive action against speculative real estate investment. Prime Minister Pedro Sánchez’s proposed 100% tax on property purchases by non-EU buyers reflects growing concerns over foreign capital inflating housing prices. 

Within the context of broader regulatory shifts, Barcelona’s decision to ban short-term holiday rentals by 2028 underscores the emphasis on reclaiming housing stock for local residents.

Despite these measures, the construction sector continues to lag, producing only 80,000 to 100,000 units per year, far below the estimated need of 230,000 to 250,000. As a result, alternative housing models such as build-to-rent (BTR), flex living, and senior living have gained momentum, with investments in these segments reaching a record EUR 2.5 billion by the third quarter of 2024. 

Portugal’s property problems

As discussions between preeminent industry leaders at the Affordable Housing Club Meeting in Lisbon covered, Portugal faces similar challenges, compounded by significant foreign demand and increasing supply-side constraints. 

The influx of international buyers, particularly from the US, has driven Lisbon’s property prices above those of other major European capitals, including Madrid and Berlin. However, as conversations at the gathering confirmed, resolving these imbalances will require a long-term commitment, particularly given the impact of rising construction costs.


Portugal’s housing sector is currently navigating several structural barriers. With land scarcity remaining a fundamental issue, recent legislative efforts to ease land reclassification, including the January 2024 bill permitting rural land conversion for urban use, have faced resistance from environmental groups. 

Discussions began with an overview of how the construction industry has struggled with high labour costs, a shortage of skilled workers, and outdated practices. While immigration has been considered as a potential workforce solution, it only ends up intensifying competition for available housing and drives up costs even further.

To resolve this issue, it was deemed to be essential for the sector to modernise through innovative approaches such as modular and prefabricated construction, which could significantly reduce costs and mitigate labour shortages.

Financing also remains a challenge, with observations that inadequate legal frameworks and a lack of investment-friendly regulations have deterred private capital, despite efforts to expand public-private partnerships (PPPs). 

Attendees agreed that a more stable and transparent investment environment is required to unlock the full potential of housing development initiatives.
 
While cultural preferences in Portugal traditionally favour homeownership, discussions also highlighted the growing need to strengthen the rental market. This shift could encourage smarter capital allocation and greater financial flexibility, but given Portugal’s past difficulties in stimulating long-term rental investment, the path forward remains uncertain.

At the heart of these discussions was the urgent need for regulatory streamlining. Licensing delays of up to three years in certain municipalities present a significant barrier to timely project execution, highlighting the importance of administrative efficiency as a key driver of housing market stability.

A collaborative approach to solving the crisis

While both countries are implementing bold strategies, the goal of ensuring that policy shifts translate into concrete results can only be achieved with a collaborative approach from all industry stakeholders working together to develop effective, sustainable solutions. 

GRI Club’s upcoming events, including Ibero-American GRI 2025 and España GRI 2025, will serve as key platforms for strategic discussion and unique networking opportunities with some of the most senior decision-makers from both sides of the Atlantic.