Spain's housing shortage drags growth while unemployment sees modest decline

Spain faces a severe residential deficit, with the Bank of Spain estimating a shortfall of about 750,000 homes against household formation. Public housing represents only 1.5% of new builds, and roughly 900,000 units (3.3% of the stock) are owned by non‑resident foreigners or used for tourism, concentrating pressure on coastal and urban areas. House prices surged 15.2% year‑on‑year in Q2 2026, reaching an average of €2,066 per square metre, with several cities exceeding €4,000 per square metre, while housing costs have risen 46.5% over the past five years, acting as an “invisible tax” on household income.

In the labour market, unemployment fell modestly in June. Galicia reduced its jobless count by 3,587 people (‑3.28%), while Spain as a whole saw a decline of 28,739, bringing the national total below 2.3 million for the first time since January 2008. The drop was driven primarily by the service sector and a surge in tourism, with 81,340 new contracts signed in Galicia—a 38.3% month‑on‑month increase. However, unemployment among foreign job‑seekers rose, highlighting divergent trends within the labour market.