What Spain can learn from Ireland's approach to its housing crisis

If you live in Spain you’ll most likely be aware of the increasing problems of the housing crisis – skyrocketing rents and housing prices, and a general deficit of affordable properties on the market.

Spain’s National Federation of Real Estate Associations (FAI) found that over half of all rental properties in Spain now require more than one salary to pay the monthly rent and in many places rents have reached historic highs.

Interestingly, Ireland has been experiencing something similar and are now taking innovative steps to try and solve it.

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Spain has been introducing a raft of measures of the past few years to try and combat the crisis, from introducing rent caps, to penalising those with empty homes and shutting down tourist accommodation to get more apartments back on the market.

So far though, it seems that the issue has only been getting worse, and housing and rental prices are higher than ever. In order to skirt the new rules, around around nine out of apartments for rent in Barcelona are offered on temporary contracts according to a study by published by the Barcelona Urban Research Institute (IDRA).

Ireland, however, may have the answer to solving its housing crisis by backtracking and abolishing its rental caps.

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The Irish government is set to approve new reforms to partially weaken rent controls as part of a broader plan to address the country's severe housing shortage. In turn, they hope that this will attract more investors to build apartment blocks and housing across the country.

The government has now approved a new policy whereby newly built homes would be exempt from the two percent annual rent cap currently in place in several urban areas, known as rental pressure zones – similar to Spain’s ‘stressed areas’ policy which have been introduced in several areas, mostly in Catalonia.

Irish Housing Minister James Browne said that the move is aimed at attracting back international investors who are currently "not looking" at the market.

In Ireland, Rent Pressure Zones were introduced in 2016 which established maximum annual increase of two percent. This was in a bid to curb skyrocketing rent increases in certain urban areas. Instead of helping though, it has ended up discouraging the construction of new homes.

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Looking at Ireland, Spain can see how rent caps can distort the market. For example in 2023, housing construction in Ireland stagnated at around 30,000 units. This was well below the target of 50,000 per year until 2030.

Already, results show that rent caps are not working in areas that have introduced them in Spain. In Barcelona, ​​which was declared a ‘stressed area’, rents rose 10.6 percent year-on-year in May 2025. Like in Ireland, this reduced the incentive to build or put new homes on the market.

In Spain, according to data from the General Council of Economists and the Bank of Spain, between 150,000 and 200,000 new homes are needed each year to meet growing demand.

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