The housing problem in Spain continues to be marked by the difference between the houses that are built and those that households need. The Bank of Spain maintains its forecast that the housing deficit could reach one million properties by 2028, despite expecting construction to increase during the coming years.
The lack of housing is not only due to few houses being built, but also because demand has grown faster than supply. The increase in population and the creation of new households have increased the need for housing, especially in areas where economic and labor activity is concentrated. The Bank of Spain points out that this difference between household creation and residential construction has been maintained during recent years and has contributed to the increase in property prices. Therefore, even if more homes are built, the market needs to increase supply to reduce the accumulated deficit.
This is stated in the economic projections report published this Friday, October 9, in which the institution warns that residential construction is progressing at a slower pace than expected. The increase in purchase and rental prices coincides with insufficient supply to respond to the growth in demand.
One million homes difference between supply and demand
The housing deficit reflects the gap between the homes needed to serve new households and those that are completed. According to the Bank of Spain's calculations, between 2021 and 2025, a shortage of around 750,000 homes accumulated, a gap that could continue to grow to reach one million by 2028.
The forecast does not mean that Spain will need to build one million homes in a single year, but rather that it is an accumulated deficit that has been forming because household creation has exceeded the construction of new homes. The figures show the distance between both realities. In 2025, around 240,000 households were created, while about 92,000 homes were completed, according to data collected by the Bank of Spain in its real estate market analysis.
Even so, forecasts point to a progressive improvement in construction. The institution estimates that more than 140,000 homes will be delivered in 2028, the highest figure since 2011. However, this increase would not be enough to eliminate the accumulated deficit, which would remain close to one million properties.
The lack of workers and land hinders construction
The difference between homes that begin to be built and those that are finally delivered helps to understand why the deficit continues to grow. According to data collected in the Bank of Spain's analysis, housing starts are around 140,000 per year, while completed homes remain below 90,000. To this data, we must add the time needed to complete a real estate development. The construction and processing period can extend between two and a half and three years, so the increase in initiated works does not immediately translate into new available homes. The institution expects part of this impulse to be reflected in the supply during 2027 and 2028, although it warns that the increase could be insufficient to compensate for the accumulated deficit.
Despite the increase in housing starts since 2024, the sector is not responding with the necessary speed. The Bank of Spain points out that the lack of labor, the scarcity of land prepared for construction, and the slowness of urban planning procedures make it difficult for new developments to be completed. To these problems are added the rising cost of materials and difficulties in connecting some developments to the electricity grid. In addition, building a home takes time: the institution estimates that the process lasts, on average, about three years. Therefore, homes that begin to be built today are not immediately incorporated into the market.
The lack of workers also constitutes an obstacle to increasing production. According to data cited by El Periódico, close to 60% of construction companies have indicated in recent quarters the difficulties in finding labor as a factor that harms their activity.
Protected housing can boost supply from 2027
Given this scenario, the Bank of Spain considers that residential investment could gain momentum in the coming years, especially if the increase in housing starts and the improvement in financing for construction and real estate development are maintained. The institution also points to the role of public administrations. State, regional, and municipal programs to build protected housing could contribute to increasing supply starting in 2027. However, the pace of recovery will depend on overcoming the difficulties currently hindering the sector.
The Bank of Spain has also announced that it will analyze the housing decrees approved by the Government to study their effects on the rental market, sales, and public accounts. However, the institution believes it is still too early to evaluate their results, as it does not have enough information to measure their impact. Meanwhile, the Bank of Spain maintains that the evolution of the market will largely depend on the capacity of administrations and the private sector to accelerate construction and overcome the obstacles limiting supply.
The Bank of Spain has also indicated that it is still too early to evaluate the impact of the recent housing decrees approved by the Government. The institution will analyze their effects when it has sufficient information, both on the rental and sales market and on the possible consequences for public accounts.
