How not to solve an “affordability” crisis.
Spain’s Socialist prime minister Pedro Sánchez began 2026 by announcing new measures to combat the country’s housing crisis. Speaking on January 12 at the launch of the Campamento project, which will see 10,700 state-owned homes built on a former military site west of Madrid, Sánchez vowed to “continue intervening in the housing market.”
New York’s new leftist mayor Zohran Mamdani, who took office on January 1, is on a similar crusade, and has promised to “stand up for the residents of this city.” In a congratulatory message to Mamdani, Sánchez said that his victory “was a sign of where the energy resides today—with those who offer hope, not fear.” Both leaders are on mission to reduce the severity of their respective housing crises—but have they correctly identified the cause of the problem?
Sánchez claims that Spain’s property market has become a playground for greedy profiteers, who are denying Spaniards their Constitutional right to housing by pricing them out of markets. The “urgent and decisive” measures that he will pass in the next few weeks include tighter sanctions on tourism rentals and incentives for landlords to rent to long-term tenants, such as a 100% rebate for those who renew leases without raising rates.
Sánchez will push them through via Royal Decree, which means he won’t have to secure parliamentary approval—but even this is no guarantee they’ll become reality. Twelve of Spain’s seventeen autonomous regions—including the major tourist destinations of Andalucía, Madrid, and Valencia—are controlled by the conservative People’s Party, which might deem them off-putting for tourists (although Andalusia’s government has already given localities the power to limit tourism rentals).
This is not the first time Sánchez has tried to tackle the housing problem, but his previous efforts have missed the mark. Last year he terminated the Golden Visa scheme, which gave automatic Spanish (and EU) residency to foreign nationals purchasing real estate worth at least €500,000. But Golden Visa transactions accounted for less than 0.1% of property sales in Spain, so their absence will have hardly any impact.
Sánchez has also proposed a 100% tax on non-EU citizens buying property in Spain, a draconian measure that would discriminate in favor of the 14% of Spaniards who own second homes (the highest such figure in Europe), most of which are only occupied during the summer. Fortunately, this proposal looks unlikely to become law.
Last April, Sánchez also announced that €1.3 billion of the EU’s Next Generation Covid recovery funds will be spent on building 15,000 new social housing units, cutting construction time by up to 60%. That sounds encouraging, especially as only 3% of Spain’s housing stock is social, compared to the European average of 9%.
But the EU has repeatedly expressed concerns about the opacity and lack of efficiency with which Spain has deployed its Next Generation funds. Nor is it guaranteed that the next Spanish government, which could be in place as early as next year, would carry on financing this project. The other obvious solution—incentivizing the construction sector by reducing bureaucracy—has so far not been pursued by Sánchez.
Tourism might have exacerbated Spain’s housing problem, but it’s not the root cause. The gap between sluggish supply and explosive demand has resulted in a deficit of around 700,000 homes. As a result, rental rates have doubled and house prices risen by 44% since 2020. In its last Financial Stability Report, released in November, the Bank of Spain identified historically low construction levels as a key factor in the deficit.
Another report concluded that, “without the pressures caused by the accumulated housing deficit, house prices across Spain as a whole would have increased by 3.7% per year on average [between 2021 and 2024], rather than the 6% rate observed.” Only about 120,000 new homes are being built in Spain every year, a sixth of the rate before the 2008 financial crisis and just over half the number required to satisfy demand, according to a 2024 report.
Still, it’s easier to blame tourists. The residents of popular destinations such as Barcelona, Málaga, and the Balearic and Canary Islands have recently staged protests, in some cases firing water pistols at visitors and holding placards telling them to “go home.” Regional governments are trying to curb tourism, in the hope that fewer visitors will make local housing more affordable.
Amongst the most stringent measures are Málaga’s three-year freeze on tourist rental licenses, and the mayor of Barcelona’s promise to eliminate all of the city’s 10,000 holiday apartments by 2028 (even though, according to the Barcelona Association of Tourist Apartments, these account for less than 1% of the city’s housing).
Wanting to control tourism is an understandable reaction to Spain’s housing crisis—but it won’t, by itself, solve the problem. Measures that could be perceived as hostile to international visitors are also risky in a country where tourism accounts for around 13% of both GDP and employment. Last year, Spain once again beat its own record, attracting 97 million international visitors and €135 billion in tourist spending.
An emerging trend might alleviate some of the strain on coastal hotspots and cities: between 2019 and 2025, visitors to sparsely-populated rural areas in northern and central Spain rose by 60%, compared to 45% in established destinations.
Like Sánchez, Mamdani has a fine line to walk—in his case between landlords and tenants, rather than tourists and residents. About 67% of New Yorkers are renters, over half of whom spend at least 30% of their income on rent every month. The city’s landlords also face rising costs and, in many cases, diminished income.
On his first day in office, Mamdani signed three Executive Orders aimed at the city’s housing problem: one to reinstate the Office to Protect Tenants, to be headed by Cea Weaver, an activist who in 2017 called home-ownership a “weapon of white supremacy” (a now-deleted tweet that she claims to regret); and two others creating task-forces to speed up construction projects.
Mamdani also wants to freeze rates on the city’s one million rent-stabilized properties, home to an estimated 25% of New York’s population, and build 200,000 more affordable (i.e., heavily subsidized) units over the next decade. Critics warn, however, that private investors will be deterred from constructing new rent-controlled housing by the prospect of low returns; while New York’s public funds, ironically, might be eroded by Mamdani’s proposed moratorium on stabilized rent hikes.
Weaver, who played a key role in creating New York’s Housing Stability and Tenants Protection Act of 2019, is also divisive, even on the left: some see her as a fearless advocate of renters’ rights, while others say she’s too radical. According to her critics, the 2019 legislation didn’t help tenants—instead, by making renovation unaffordable for landlords, it condemned renters to live in dilapidated and potentially dangerous buildings.
The proposed new housing measures from Sánchez and Mamdani may look promising to struggling renters, aspiring homeowners, and residents of tourist hubs. But the challenge for both leaders is to create more affordable housing without punishing tourists, landlords, or the private sector—because they’re all needed as part of the solution.
