For over three decades, Marga Aguilar consistently paid her rent without fail in her beloved Modernist-style apartment in the bustling center of Barcelona. The building’s owner treated Aguilar and her neighbors like extended family, keeping rents affordable and creating a strong sense of community. But recently, with the owner’s passing, Aguilar, now 62, faced a daunting challenge. A Dutch investment firm swooped in, acquiring the property—Casa de la Papallona, known for its iconic butterfly mosaic—and unveiled plans to turn it into a profitable short-term rental venue. The tenants were shocked to receive eviction notices, demanding them to vacate the next month.
“When I got the notice, it felt like the ground was slipping from under me,” Aguilar recounted, her 92-year-old father having moved in during the pandemic. “We’re at a loss for where we’ll go. Finding an affordable place seems impossible.”
Spain is grappling with an escalating housing crisis that ranks among Europe’s most severe. Since 2015, nearly ten percent of its housing supply has been snatched up by investors or transformed into tourist accommodations. This scarcity has inflated housing prices at a rate much faster than wage growth, putting homes out of reach for many.
Barcelona sits at the heart of this housing conundrum, a prime example of the complexity and urgency of the crisis. As summer ushers in a wave of tourists, the city is racing against time to devise effective solutions. Although various measures have been introduced to improve housing affordability, investors often maneuver around regulatory hurdles. Experts caution that resolving a problem so entrenched will require time.
“Everyone should have a right to housing, not be at the mercy of market forces,” emphasized Salvador Illa, president of Catalonia, including the city of Barcelona. “Addressing this issue is critical and demands our immediate attention.”
Reflecting a broader European trend, Barcelona showcases the impact of real estate being treated predominantly as a financial asset by investors. With global tourism and a transient workforce on the rise, landlords increasingly opt for short-term rentals, even as cities like Barcelona desperately need affordable housing. The depletion of once robust social housing stocks, sold off by cash-strapped governments, compounds the issue.
Housing affordability is fueling growing inequality across Europe. Eurostat data reveals rents in the European Union have surged by 20% over the past decade, and home prices have soared by 50%. In 2023, a staggering 10% of Europeans found themselves spending over 40% of their income on housing.
In response, European Commission President Ursula von der Leyen recently appointed the EU’s inaugural housing commissioner, aiming to reverse the alarming trends. In Barcelona, the housing crisis is so dire that Mayor Jaume Collboni and leaders from 14 European metropolises are collectively urging Brussels to address the issue with the urgency typically reserved for defense matters.
“Europe faces external threats, but internally we’re dealing with rising inequality from a lack of affordable housing,” Collboni explained from his historical office, overlooking Plaça Sant Jaume. Barcelona has been particularly hard-hit by the housing crisis. Famous for its landmarks and attracting 15 million tourists yearly, the city’s economic growth has been shadowed by housing shortages as tens of thousands of international workers settle in.
Though Spain’s Constitution enshrines the right to housing, rental prices have climbed 57% since 2015, with home prices up 47%, according to PwC. Household incomes have only risen 33% in comparison. Barcelona’s situation is even more acute, with rents jumping 68% over a decade.
To address these challenges, newly elected Socialist mayor Collboni moved quickly to cap rental prices, resulting in a 6% average drop. Following protests demanding affordable housing, Barcelona stands poised to become the first European city to ban Airbnb licenses by 2028, converting those homes to long-term rentals at regulated prices or forcing a sale. “By releasing 10,000 flats back into the market, nearly 25,000 residents could return to Barcelona,” Collboni pointed out.
Catalonia is setting in motion plans to collaborate with developers to construct 50,000 affordable homes by 2030, simultaneously aiming to halve the time needed for building permit approvals. “Market failure calls for intervention,” added Illa.
Housing advocates, however, argue these efforts address long-term issues and not immediate needs. They urge the government to push landlords and banks holding defaulted mortgages to convert millions of vacant homes—75,000 in Barcelona alone—into long-term rentals. “People are being displaced every day, and utilizing existing empty housing is an immediate fix,” argued Max Carbonell from Catalonia’s Socialist Union of Housing.
Barcelona is adopting varied strategies to keep residents in their homes, including purchasing buildings from investors. Last year, it spent €9 million to reclaim Casa Orsola from Lioness Inversiones, after it acquired the historic site for €6 million. The move drew protests, with activists decrying public funds benefiting the very investors causing the crisis.
Property owners counter that stringent renter protections discourage them from renting, favoring vacant homes. “Developers and landlords are painted as villains, deterring investment,” said Jesús Encinar, founder of Spain’s Largest real estate portal, Idealista.
The tension is palpable, as seen with Spain’s national law allowing investors to flip properties for short-term rentals, despite Collboni’s label of it as a “black hole” affecting tenants. Prime Minister Pedro Sánchez aims to repeal this law.
New Amsterdam Developers, the firm behind Casa de la Papallona, has converted hundreds of Barcelona apartments for short-term stays targeting affluent business travelers, often at the expense of local residents. The company did not comment on these activities.
In a nearby district, Inmobiliaria Gallardo exploited a temporary loophole in Catalonia’s laws to convert an entire building into tourist accommodations. “Suddenly, our longstanding neighbors began leaving in droves,” recalled Maite Martín, a long-term resident. Now, a substantial portion of the apartments cater to tourists. The developer did not respond to inquiries about the situation.
“We used to be a tight-knit community,” Martín explained, surrounded by longtime neighbors, “but that’s unraveling.” Worse yet, she’s contended with messiness such as cleaning vomit off her laundry due to raucous tourists above her—a symptom of Barcelona’s escalating housing tension.
To bring attention to their plight, residents in Martín’s building and others in Casa de la Papallona are defying eviction orders as a form of protest. Such occupations have become a grassroots movement challenging the housing crisis, although local officials are pushing back against it.
As turmoil brews, the government is sourcing new solutions. On Barcelona’s hills, construction continues for social housing projects designed to meet stringent building codes. Arcadia PLA, a private firm, won a contract to build 15 energy-efficient, rent-controlled apartments for 60 residents. It’s a slice of the overarching plan to expand Catalonia’s social housing resources.
However, given the problem’s scale, more aggressive measures are necessary. “We must expedite our efforts if we’re to catch up with demand,” said Carles Mas, overseeing this project for the Catalonia government.
José Bautista contributed to the reporting.
