According to BBVA Research’s Observatorio Inmobiliario last October, a shortage of affordable housing could limit sales growth in the remainder of 2025 (by 0.5%) and in 2026 (by 0.3%). At the same time, insufficient construction of new housing, despite the increase in its volume, will lead to an increase in prices both in 2025 (by about 10%) and in 2026 (by about 7%).
As BBVA Research economists emphasized, rising prices will continue to indicate an imbalance between supply and demand. Prices were up 9.7% year on year in the first half of 2025, but in real terms they are still 30% below 2007 highs. The lack of product is also affecting rentals, where incomes show stronger growth: 34% versus 22% between 2019 and the second quarter of 2025.
Structural and market reasons for supply shortages
The supply shortage combines structural and market factors that mutually reinforce each other. The first include:
- slow development of land resources;
- regulatory uncertainty;
- labor shortages, leading to high costs and relatively low profitability compared to other eurozone countries, which explains the low level of investment.
In particular, sales as a percentage of total assets remain very low. This is due to the excessively long period from the purchase of land to the start of construction. As a result, assets are financed mainly from own funds, but pay for themselves for a very long time. This problem is particularly acute for small and medium-sized enterprises, which make up the majority of the sector’s production structure.
Regulation and investment climate
To make investment in the sector more attractive, the report states that “accelerating the timetable for land conversion should be a priority. In addition, it would be beneficial to improve regulation, help reduce business operating costs and increase productivity.”
BBVA Research notes that regulatory uncertainty is another factor that directly impacts investment. Thus, recent measures to control rental prices, restrictions on large owners and the unsuccessful attempt to reform the Land Law have increased the perception of risk in the market.
Labor shortage in construction
Another challenge facing the sector is the lack of skilled labor and the large number of unfilled vacancies – including in important trades such as builders, plumbers or electricians. While immigration has helped sustain activity, the lack of job training programs and effective job training policies has held back growth.
Economists at BBVA Research agreed that labor shortages will remain a challenge for construction in the medium term. In this context, they emphasized the need to achieve greater political and institutional consensus that would allow for structural reforms and a boost in housing supply.
