In today’s housing market, the seemingly impossible can become reality. According to data from the Spanish Mortgage Association (AHE), when considering appraisal values from the Ministry of Transport, Mobility and Urban Agenda (Mitma), there are eleven provinces in Spain where sheltered housing prices exceed those of the free market. In these areas, buying a home without sales or rental restrictions is cheaper than purchasing a home that carries such restrictions.
Social housing comes in several forms, from traditional formal social housing (VPO) to limited price public housing (VPPL) or basic VPPB, and even a category simply labeled social housing. Each type carries different maximum sizes and is often intended for rental. The nature of these properties is tied to the land they are built on, as defined in city planning, and the price ceilings are set by the autonomous community for sale or rent.
Luis Corral, CEO of Foro Consultores, has stated that paying more for a free market home is unnecessary when a protected option is available. This phenomenon is most evident in provinces such as Teruel, Real City, Basin, Lleida, León, Lugo, Toledo, Córdoba, Albacete, Ourense, and Kalelon. In these regions, the gap between free housing and protected housing ranges from a mere nine euros per square meter in Castellón to as much as 335 euros in Teruel. The majority of these towns sit inland, away from the spotlight of mainstream real estate investors.
How can this disparity arise?
The head of Foro Consultores notes several scenarios that can push free housing prices below those of protected housing. One key factor is a temporary imbalance or an oversupply of free housing. When certain areas experience population decline, prices can stay low and struggle to rise above a steady baseline.
Another driver is a downcycle in the real estate market. After the 2008 housing crisis, the maximum prices for subsidized housing—defined as the module price—were set by communities in a rigid, artificial manner. Oversupply and weak demand in the free market created a situation where free market prices fell while subsidized prices did not adjust as quickly. The result is a mismatch where some free market prices are higher than those for subsidized homes, reversing the expected relationship.
There is also the cost side to consider. Building sheltered housing from scratch has become increasingly expensive, especially after recent inflation. A few years ago, construction could proceed for under 1,500 euros per square meter without factoring in land costs; today, numbers like that no longer hold. This creates a floor for the minimum price of protected housing, making it harder for any developer to push prices downward without adjustments in policy and planning.
Investors typically avoid building subsidized units if the maximum sale price, known as the module, does not cover construction, land, and tax costs. This has been a notable issue in communities like Madrid, where the module has not seen updates since 2008. Escalating construction costs further hinder the viability of affordable housing. Corral suggests a practical remedy: update the module to reflect current market realities in each region. He notes that protected housing often lags behind free housing in terms of pricing and availability, and administrative inertia can perpetuate imbalances. The takeaway is clear: if a free market home meets the necessary conditions, there is little incentive to opt for a subsidized option with its inherent restrictions, unless those protections directly benefit the buyer. In short, align the protected program with the current market and consumer needs to restore balance across the housing spectrum.