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Spain’s Prime Minister Pedro Sanchez has proposed bold measures to address the country’s housing crisis, including a 100% tax on homes purchased by non-EU foreigners. It’s an unprecedented move aimed at discouraging overseas buyers from snapping up properties, which Sanchez argues are being used for investment rather than housing, exacerbating the housing shortage.
The tax will target non-European Union residents, who accounted for 27,000 home purchases in 2023 alone. Sanchez stressed that these properties are often acquired to generate profit, not for living, a practice Spain can no longer afford amidst soaring housing costs and dwindling availability. In some areas, particularly tourist-heavy spots like the Balearic and Canary Islands, the demand for properties has driven up rents and priced locals out of their own neighborhoods.
The initiative is part of a broader housing reform package, which includes higher taxes on short-term holiday rentals and incentives for landlords to offer affordable housing. Sanchez also aims to accelerate the construction of new homes, transfer government land for social housing projects, and expand affordable housing options, particularly for young people.
Spain’s housing market has faced mounting challenges over the years, including a 48% rise in prices over the past decade, far outpacing household income growth. Meanwhile, homelessness has surged, and rents in cities like Barcelona have climbed sharply, with average rates increasing by 53% in the last 10 years.
Tourism, while a major contributor to Spain’s economy, has added pressure to the housing market. With 94 million visitors in 2024, cities like Barcelona and Madrid have struggled to balance tourist demand with the needs of residents. However, Sanchez is clear that the housing crisis is not solely tourism-driven, pointing to lingering effects of the 2008 financial crisis, high youth unemployment, and rising construction costs as additional contributors.
The timeline for implementing these measures remains unclear, as Sanchez’s minority coalition government will need parliamentary approval. However, if passed, these reforms could mark a turning point in Spain’s approach to its housing crisis, prioritizing local residents over foreign investors and short-term profits.
*Source: Al Jazeera
