Madrid

Madrid is facing a deepening housing crisis driven by a substantial shortage of available homes and rapid price increases for both renters and buyers. Construction has lagged far behind population growth, with labor shortages and high development costs worsening the bottleneck. This gap between demand and supply has made access to affordable housing especially difficult in central districts, where rents for a two-bedroom apartment range from €1,800 to €2,600, and citywide average rents have risen by more than 15% year-on-year—massively outpacing wage growth.

The crisis affects a wide spectrum of residents, but its impact is felt most acutely by urban youth, low-income households, immigrants, and single-parent families. These groups face rising risks of overcrowding or eviction and often must accept poor-quality housing or share small spaces. The influx of foreign buyers and the booming short-term rental market have also inflated prices, reducing availability for local residents. Even as home purchases become unattainable for a growing share of the population, the already strained rental market cannot meet soaring demand. The crisis is structural and most acute in Madrid’s most central and popular neighborhoods, where affordability pressures and lack of supply converge most forcefully.

In Madrid, around 40% of households currently rent their homes, while 60% own them. The rental market has grown sharply due to rising property prices and changing lifestyles, with renting increasingly favored by younger generations. As of spring 2025, the median price to purchase an apartment is approximately €5,467 per sqm—up 24% over the previous year—while the median rent is about €21.4 per sqm monthly, which is €10 above the Spanish national average.

Publicly owned housing plays a minimal role: only about 2–2.5% of all dwellings are publicly owned, far below the EU average, and just 1.1% of rental homes are designated as social housing, making public provision highly limited. Most social housing in Madrid is owner-occupied rather than rented, and social housing can be private or public, but always subject to price controls and targeted subsidies for eligible income groups.

Public housing and social housing in Madrid are not strictly synonymous. Social housing (vivienda de protección oficial or VPO) may be privately or publicly owned and includes regulated pricing and allocation based on need and eligibility, whereas public housing refers specifically to dwellings directly owned by local authorities. In both cases, public supply remains far below demand.

Madrid’s city administration has recently prioritized policies that largely favor private development and conversion of housing, including new laws easing the transformation of residential blocks into short-term tourist apartments and allowing more commercial spaces to become ground-floor tourist flats. This approach is widely criticized for accelerating the loss of long-term residential units and deepening the affordability crisis, as it enables thousands of buildings citywide to shift from residential to tourist use, with minimal emphasis on building or preserving genuinely affordable homes for local residents.

The primary regional response is the "Plan Vive," led by the Community of Madrid but operating across the metropolitan area. This multi-year program aims to deliver 25,000 new affordable rental units by 2032, prioritizing youth under 35, seniors, people with disabilities, and women affected by domestic violence. Most units are realized through public-private partnerships using industrialized building methods to speed up delivery and reduce costs, but only a minority are located within Madrid city proper.

At the national level, the Spanish government has committed to tripling public investment in housing for 2026–2030 and established a new state-owned housing company to convert and manage thousands of former bank-owned properties as affordable rentals, with eligibility capped at 30% of income. Measures to penalize vacant property owners and regulate rents in “stressed” areas are also being rolled out. However, city-level action in Madrid remains limited and is widely criticized as insufficient to meet the scale of local need or to ensure sustainable, inclusive growth.

Several individuals and organizations in Madrid have actively voiced the need to tackle the housing crisis and promote more affordable, sustainable housing. From civil society, Quique Villalobos of the Federation of Neighborhood Associations of Madrid is a prominent spokesperson, frequently highlighting the urgency of expanding the supply of public and affordable homes, especially in central districts where rent hikes and tourist rentals exacerbate the problem.

Academia can play a key role; leading urban planning researchers from Spanish universities such as the Universidad Politécnica de Madrid and Complutense University frequently publish studies and advise policymakers on sustainable housing models. These institutions could be strong collaboration partners thanks to their expertise in housing, urban development, and social impact.

In the real estate sector, firms like Avalon, Sogeviso, and Culmia are directly involved in delivering affordable housing through large-scale projects linked to the regional Plan Vive and city-level initiatives such as Suma Vivienda Plan. These companies use innovative, industrialized construction methods and public-private partnerships to reduce costs and delivery times.

From the startup world, Habitacion.com stands out for pioneering room-ownership models that offer young people new routes to homeownership.

NGOs and advocacy groups like the Federation of Neighborhood Associations and European urbanist networks campaign for tenant protections and more inclusive urban policies. Collaborating with such groups would bring crucial insight into lived experience and social needs.

Overall, collaborations among public bodies, private developers, academia, social enterprises, and citizen organizations are crucial to driving sustainable and genuinely affordable housing solutions in Madrid.

Housing cooperatives in Madrid offer a not-for-profit, collective approach to access more affordable housing by enabling members to self-develop or rehabilitate buildings, reducing acquisition costs by about 20–30% compared with the open market. Members contribute capital and can participate in key decisions, while democratic governance and legal protections characterize the model. The sector is growing, but its overall scale remains modest: by late 2025, around 2,000 cooperative homes in "usufruct for use" are expected across Spain, with only a small fraction of projects (about 15, with three completed and inhabited, serving around 120 people) located inside Madrid city proper. Cooperative housing still represents a very small share of total housing units in the city. Most new cooperative initiatives in Madrid operate independently, with limited land or regulatory support; municipal and regional policies have focused predominantly on public-private partnerships and private market solutions, with only nascent signs of greater institutional engagement. Recent financing innovations—such as cooperative investment funds—aim to make projects more viable. While public authorities increasingly recognize cooperative housing in policy discussions, practical support (like land cessions, specific subsidy programs, or regulatory advantages) remains rare, resulting in slow sectoral development compared to other European cities.