The Housing Law celebrates its second anniversary with the real estate market under maximum tension.

The Housing Law, the coalition government's flagship legislation, is now two years old, amid a housing market under extreme strain . Access to housing has become citizens' top concern, as the difficulty in finding affordable housing increases and cities are experiencing an unprecedented rental crisis.

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This latest emergency is what the law was primarily intended to address, but here it has clearly fallen short. Rent regulation is currently only applied generally in Catalonia and in seven municipalities in the Basque Country. The PP-led regional governments reject the intervention and continue to ignore it, and even where rents are being capped, the outcome is mixed, with strong opposition from the business, real estate, and landlord sectors , both large and small. Housing advocacy groups, for their part, are calling for greater intervention and more social services.

In its role as a laboratory for housing legislation, Catalonia offers the only data available to measure the effectiveness of the law's full implementation. And what the figures show is that, yes, rental prices are being contained and falling slightly, but the market is also showing signs of slowing down.

Only Catalonia and the Basque Country have already regulated rents; the People's Party (PP) maintains the boycott.

In the first 140 municipalities declared a stressed area, including the city of Barcelona and its greater urban conurbation, rents fell by an average of 4% between the second and fourth quarters of 2024—the latest data available from the Catalan Institute of Land (Incasòl), from an average of €911 per month to €878. In the Catalan capital, the epicenter of the housing crisis, rents fell by 6.4%, to €1,117, after years of continuous increases above the CPI.

However, the contract balance—the difference between new and new listings—has plummeted by 60% between the first and last quarters of 2024, and seasonal rentals, which seek to circumvent regulations, have grown by 45%. Meanwhile, available supply still falls short of demand. In Barcelona alone, each regular rental advertisement published receives 61 contacts, according to Idealista. The portal, whose data is used by the Bank of Spain to compile its housing reports, notes that the four Catalan capitals are among the five markets where rental supply has declined the most in the last year. Girona (-42%) tops the list, followed by Ciudad Real (-39%), Barcelona (-37%), Lleida (-37%), and Tarragona (-36%).

“We don't see a short-term improvement in any aspect; prices have slowed, but we need a longer implementation period for an accurate assessment, and the most worrying thing is that supply isn't growing,” says Òscar Gorgues, manager of the Barcelona Chamber of Urban Property. According to this organization, the Housing Law and other regulations from the Generalitat de Catalunya have generated uncertainty among homeowners. “Many of them, especially small owners, are withdrawing their apartments from rentals to sell them; that's why sales are rising so much,” he maintains.

Rent prices are falling in Catalonia.

For Jaime Palomera, a researcher at the Barcelona Urban Research Institute (IDRA), the state regulations are on the right track, having managed to stem the skyrocketing increase in rental prices in Catalonia. However, he emphasizes that they have "some loopholes," such as seasonal rentals, which some owners use to circumvent the price cap. A law on short-term rentals is currently being negotiated in Congress, which depends on Junts (Junts), and Salvador Illa's government is already preparing to regulate these contracts so that their rents are also capped, in addition to increasing taxes for large property owners and extending preferential purchase by the administration . Palomera, who positively assesses the Generalitat's plan to try to build 50,000 social housing units, points to the need to apply "surgical taxation" that would tax speculative activity more heavily and reduce taxes for those who build social housing units and for families who buy their first home.

In response to criticism from landlords, the government points out that the residential rental market in Catalonia has not been reduced due to price controls. Housing Minister Isabel Rodríguez stated in an interview published today in this newspaper that the rental market has also fallen in cities where regulations are not applied, such as Madrid, and points to a shift from traditional rentals to more profitable options, such as tourist accommodation. According to the latest report from the Bank of Spain, 50,000 tourist homes have entered the market in the last year.

The seasonal rental hole

In any case, the data compiled by the supervisor indicates year-on-year increases in new rental contracts exceeding 10% on average in 2022, 2023, 2024, and the first quarter of 2025. These increases are greatest in large urban areas and tourist zones.

The consequences of this rising rental cost, which the Housing Law fails to stem, are visible among families in the lowest income brackets, who are finding their overstretch increasingly difficult, despite increases in average real wages in recent years. "There is a group of low-income people who shouldn't be renting on the market; we need more social housing," insisted José García Montalvo, professor at UPF, this week at the Construmat fair. To achieve this, apart from laws, García Montalvo and Francisco Pérez, CEO of Culmia, agreed at the same fair, that adequate financing for housing policies is required.