Young homeowners: on the verge of extinction as their numbers have halved in a decade.

In Spain, the percentage of young people under the age of 35 who own their own home has fallen sharply from 69.3% to 36.1% over the past decade due to tightening access to homeownership. This has led to an increase in wealth inequality in the country, the Bank of Spain reports in its 2022 annual report.

The bank points to a link between this shift to renting and poor labor market conditions. They also note that a high percentage of owner-occupied housing typically reduces wealth inequality, but the drop in this percentage in Spain since 2014 from 80.4% to 73.9% has contributed to rising inequality.

Rent prices are also making it difficult for young people to become independent. The high rents people are forced to pay relative to their incomes are increasing the number of people on the brink of social exclusion and households with limited ability to spend money on other goods and services.

According to the Bank of Spain, 48.9% of Spanish households living in rented accommodation were at risk of poverty or social exclusion in 2021, the highest percentage in the EU. 40.9% of them spent more than 40% of their affordable income on housing, compared to an EU average of 21.2%, especially for low-income households. Experts advise that this percentage should never exceed 30 or 35%.

The Bank of Spain notes that one of the reasons for the rise in rental prices since 2014 is that there has not been enough supply growth to meet the strong increase in demand.

Bank of Spain proposes to increase investment in public housing and to consider tax and regulatory measures to increase the supply of rental housing from private companies.

The Bank of Spain emphasizes that, in addition to public policies, cooperation with the private sector is necessary to develop the supply of rental housing. This will help mitigate rental price growth, especially in stressed regions. In doing so, it would be desirable to "avoid measures that asymmetrically distort price signals, strengthen effective legal protections for landlords in rental housing, and reduce regulatory uncertainty in this market." In addition, the Bank of Spain proposes to consider tax and regulatory measures to increase the supply of rental housing from professional private companies.