The average effort required to buy a home, a ratio that relates the typical market price of housing to average family incomes, exceeds 40 percent—levels not seen since 2014. This finding comes from a study by the appraisal firm UVE Valoraciones, using data from the Ministry of Housing and Urban Agenda (MIVAU), the Cadastre, and the National Institute of Statistics (INE). According to UVE, two main factors are driving this tighter housing affordability: higher interest rates and, in tourist-oriented towns, purchases by buyers who do not reside in the area permanently.
Around the country, lenders generally require that a mortgage payment not exceed 30 to 35 percent of a household’s income, with some banks allowing up to 40 percent. In eleven of the twelve most populous Spanish cities, these mortgage feasibility thresholds are routinely surpassed, with Palma de Mallorca at 58 percent, Madrid at 57 percent, Málaga at 51 percent, Barcelona at 50 percent, Las Palmas de Gran Canaria at 41 percent, Alicante at 40 percent, Bilbao at 39 percent, Seville at 38 percent, Valencia at 35 percent, Córdoba at 32 percent, and Zaragoza at 31 percent.
Since the 2008 housing bubble burst, when the national average was around 60 percent, the effort index moved downward for years, reaching a low of 30 percent in 2021. Since then, it has begun recovering, matching a post-pandemic price rally in housing and continuing to rise, at least up to the present moment.
Cities where buying a home is nearly impossible
There are twenty cities in Spain where purchasing a home is effectively out of reach because the mortgage would consume more than 60 percent of the average income, a level lenders typically will not authorize. German Pérez Barrio, president of UVE Valoraciones, notes that this situation causes many real estate purchases in certain municipalities to be driven by residents who do not live there year-round and who have substantially higher purchasing power than the local average.
Many of these towns have a strong tourist component. When applying the data, even families with higher incomes would need to allocate more than their entire salary to service the mortgage for the property. Examples include Santa Eulalia del Río in Ibiza, Adeje in Tenerife, Marbella, and Jávea in Alicante. The burden also exceeds 60 percent in Calvià (Mallorca), San Bartolomé de Tirajana (Gran Canaria), Fuengirola (Málaga), Arona (Tenerife), Eivissa (Ibiza), Mijas (Málaga), Ciutadella de Menorca, Estepona, Llucmajor (Mallorca), Benidorm, Benalmádena (Málaga), Puerto de la Cruz (Tenerife), and San Roque (Cádiz). Collectively, these locations house more than 1.06 million residents.
There are also several Madrid and Barcelona districts where the average effort exceeds 60 percent, home to more than 790,000 people. In Barcelona, the zones are Ciutat Vella and Eixample; in Madrid, Retiro, Salamanca, and Arganzuela see mortgage burdens above this threshold.
Affordable towns for purchasing a home
On the opposite end of the spectrum, there are towns where average effort falls below 25 percent, and in some cases under 20 percent, meaning owning a home is affordable relative to local incomes. These areas are primarily in regions with less dynamic real estate markets. The list includes several provincial capitals like Ciudad Real, Ávila, Soria, and Palencia, along with towns such as Miranda de Ebro, Linares, Alcoy, Burriana, Ferrol, Ontinyent, and Ponferrada. Puertollano (Ciudad Real), Mieres (Asturias), Algemesí (Valencian Community), and Novelda (Alicante) are four municipalities where families pay the smallest mortgage relative to income according to UVE Valoraciones.