Spain's housing crisis and GDP slowdown raise alarms for growth and demographics

The Bank of Spain warned that soaring house prices are harming Spain’s long‑term economic prospects and demographic outlook. The central bank’s annual report says high purchase and rental costs delay household formation, lower fertility rates, increase household debt and cut disposable income, which together threaten future productivity and wealth accumulation.

New data from the National Statistics Institute show that Spain’s GDP growth slowed in the first quarter, confirming concerns raised by the Independent Authority for Fiscal Responsibility (AIReF). The AIReF criticised the government for presenting an overly upbeat picture, noting that growth now relies almost entirely on domestic consumption and investment while the external sector has turned into a drag. The authority urged a more balanced assessment and policies to address public spending and improve competitiveness.