When Ana Jimena Barba, a young doctor, started working in Madrid last year, she moved to her parents’ house half an hour outside the city until she was able to save enough to buy her own house. But when she looked at the houses in the same town, almost all of them had a price above 500 thousand euros.
The amount—almost 20 times more than the average annual salary in Spain—curiously corresponds to the cost of the country’s “golden visa,” a program that offers residency to wealthy foreigners who buy real estate there. After a decade, the program has generated billions of euros in investments, but has also helped fuel a heartbreaking real estate crisis for Spanish citizens themselves.
“There’s nothing I can afford,” said Barba, an allergist. “If foreigners inflate prices for those of us who live here, it is an injustice.”
Facing growing pressure to address its housing crisis, Spain said last month it would scrap its golden visas, the latest in a broader withdrawal from the program by governments across Europe.
Half a dozen eurozone countries offered the visas at the height of Europe’s debt crisis in 2012 to help plug huge budget deficits. Countries that required international bailouts—Spain, Ireland, Portugal and Greece among them—were particularly desperate for cash to pay creditors.
The countries obtained unexpected profits: Spain alone has issued 14,576 visas linked to wealthy buyers who made real estate investments of more than 500 thousand euros. But the prices they can afford are driving people out of a market already heavily inflated by the rise of Airbnb and the lure of Wall Street investors.
“Access to housing should be a right and not a speculative business,” Pedro Sánchez, Prime Minister of Spain, said last month when announcing the end of the country’s golden visa program.
Visas make it easier for people outside the European Union to purchase the right to temporary residence, sometimes without having to live in the Country. Investors from China, Russia and the Middle East flocked to buy real estate this way. In recent years, British citizens have purchased homes in Greece, Portugal and Spain, as have an increasing number of Americans.
Portugal, which has made more than 5.8 billion euros in investments thanks to visas, modified its program in October to eliminate real estate as an investment to reduce speculative purchases and cool an overheated real estate market. An influx of foreigners has displaced thousands of low-income Portuguese citizens in cities like Lisbon.
The Lisbon government is trying to solve the problem of affordable housing with new rules that would require landlords to rent empty apartments to families, cap rents and convert some commercial properties into housing.
Following Russia’s invasion of Ukraine, EU officials urged governments to end golden visas, warning they could be used for money laundering, tax evasion and organized crime. Ireland closed its program last year, in part to address concerns that Russian citizens were laundering money. Greece raised 4.3 billion euros in investments through golden visas from 2021 to 2023. The country is raising its foreign investment threshold from 500 thousand to 800 thousand euros in the Athens area and on popular islands such as Mykonos and Santorini.
Laura McDowell, an agent at Athens-based real estate agency Mobilia, said the problem worsened when investors from numerous countries converted homes purchased through golden visa programs into vacation rentals, further reducing the supply of affordable housing.
The Spanish Government plans to build 40,000 social homes for people with limited resources as part of a broader plan to restore affordable accommodation.
But it’s not clear that it will quickly help people like Barba. Rents in Madrid will increase 15 percent in 2023. An inflation rate of 3.2 percent has added to the tension.
“It would take years to save enough to put down a deposit on a house,” Barba said. “Buying a house is just a dream.”
