Rental housing market in Spain shrinks by 61% since 2020

Spain’s rental housing market has undergone major changes. Since 2020, supply has fallen by 61%, while average rents have increased by around 40%, according to Idealista. Cities that previously had the most dynamic turnover are now facing the most severe pressure.

Decline in rental housing in Spain’s largest cities

The contraction of the rental market in Spain has been uneven, hitting the largest and most in-demand cities the hardest. In Barcelona, around 90% of rental listings available in 2020 have disappeared over the past five years. Significant declines were also recorded in Granada (-76%), Palma (-75%), Madrid (-73%), San Sebastián, Las Palmas de Gran Canaria and Seville (all -72%), as well as Bilbao (-70%).

Fewer rental options are also available in other high-demand cities. Málaga and Girona saw a 69% drop, while Oviedo declined by 66%. Similar trends are observed in Cádiz and Valencia (-65%), Tarragona (-59%), Salamanca (-58%), Alicante (-54%), Córdoba (-53%) and Santander (-51%).

At the same time, some provincial capitals show the opposite trend. In Cuenca, rental supply increased by 113%, followed by Ceuta (+67%), Lugo (+35%), Segovia (+23%), and Cáceres (+18%). Smaller increases were recorded in Badajoz (+8%) and Jaén (+5%).

Sharp rise in rental competition in Spain

The decline in supply has led to a sharp increase in competition among tenants across the country. The strongest surge was recorded in Lleida, where competition rose by 1050%, more than elevenfold. Significant increases were also seen in Palma (+1041%), Burgos (+976%), Barcelona and Granada (both +917%), Bilbao (+864%) and Salamanca (+839%). In Madrid, competition increased by 558%, reflecting high demand combined with limited availability in the capital.

Even in regions with more moderate dynamics, growth remains substantial. Competition rose by 134% in Ceuta, 141% in Cuenca, 178% in Pontevedra, 203% in Lugo, and 210% in Badajoz. No provincial capital recorded a decline, confirming sustained pressure on the rental market nationwide.

Rising rental prices in Spain

Changes in Spain’s housing market have directly impacted rental costs. Over the past five years, prices have increased in all provincial capitals without exception, although the pace varies significantly by region.

The strongest growth was recorded in Valencia (+82%), followed by Alicante (+73%), Segovia (+71%), and Barcelona and Palma (both +63%). Other notable increases include Málaga (+62%), Santa Cruz de Tenerife (+58%), Guadalajara (+57%), Madrid (+54%) and Ávila (+51%).

In some cities, price growth has been more moderate. Rent increased by 22% in Bilbao, San Sebastián and Melilla, by 23% in Huesca, 24% in Vitoria, 25% in Córdoba and 26% in Pamplona. Overall, however, the trend remains consistent: rents continue to rise amid a persistent shortage of supply.

Restrictions on Spain’s rental housing market

Spain’s rental market is also being shaped by stricter regulation, particularly in the short-term rental segment. In Barcelona, authorities have decided not to renew licences for around 10,000 tourist apartments after November 2028. This is linked to a 68% rise in rents and a 38% increase in property prices over the past decade. In Valencia, strict limits have been introduced: no more than 2% of housing stock per district and a total cap of 8% for all types of tourist accommodation. Málaga has imposed a three-year moratorium on new licences, while urban planning rules are being revised due to pressure in certain districts. In Seville, authorities are stepping up enforcement against illegal rentals, including utility disconnections. In the Balearic Islands, fines for illegal tourist rentals reach €400,000, and in Catalonia up to €600,000.

At national level, regulation is also tightening. A state registry for short-term rentals has been introduced, with a significant number of applications rejected. Measures on rent controls and contract extensions are in place, reinforcing a broader policy shift in the housing market. In April 2026, the government approved a €7 billion housing plan, which also bans the conversion of subsidised housing into private stock after the support period ends.

Investment outlook for Spain’s housing market

Analysts at International Investment note that Spain’s rental market faces a deep structural imbalance. Public rental housing accounts for less than 2% of total stock, well below the OECD average. Pressure is strongest in major cities, driven by internal migration, foreign buyers, employment growth, tourism demand and limited land availability.

Tighter regulation and policy changes in several cities are beginning to affect price dynamics. In some areas, including Barcelona, signs of stabilisation and even slight rental declines are emerging. At the same time, regulatory pressure on short-term rentals is increasing, alongside expanding restrictions on property owners.

For investors, this creates a mixed outlook. On one hand, stricter rules and gradual policy harmonisation may improve long-term predictability. On the other, frequent regulatory changes and tighter restrictions increase policy risk, reduce flexibility in business models and may limit returns, particularly in short-term rental segments and tightly regulated cities.