Real Estate Speculation vs. The Citizen

The West faces a major challenge. We do not want our society to be divided into two classes: wealthy property owners and poor tenants.” These were the words recently spoken by Spanish Prime Minister Pedro Sánchez. Under his leadership, Spain will soon impose a 100% tax on any real estate purchased by non-resident nationals from countries outside the European Union. Last year, around 30,000 such buyers, primarily motivated by speculation, purchased properties without living in them. In 2024, approximately 15% of all real estate transactions in Spain involved these foreign investors, triggering a price surge of nearly 50% across the market—exceeding the peaks observed during the 2007 housing bubble.

This prohibitive 100% taxation on non-resident property buyers follows Spain’s recent decision to eliminate the “golden visa” program, which previously allowed non-Europeans to live and work in Spain for three years in exchange for a €500,000 real estate investment. According to national statistics, 94% of these visas were linked to property purchases, with British investors being the primary beneficiaries—clearly the main targets of this latest policy shift. With 3.8 million properties in Spain currently unoccupied by their owners, the government is keen to prioritize its own residents, who are struggling under the weight of a new housing crisis. The distortions in the market are glaring: for example, some landlords who own four to five short-term rental apartments pay less in taxes than hotels. Decent housing in Barcelona, Madrid, or Málaga has become nearly impossible to find. Local residents—who live, work, and pay taxes in these cities—are being pushed out as speculation drives rental prices through the roof. In Barcelona, for instance, rental costs have soared by over 65% in the past decade. In 2024 alone, the average price for a single rented room (measuring just 8 to 14 square meters) rose by 12% to €520 per month—a 43% increase over the past three years.

This issue is not unique to Spain. Many other nations, including within Europe, suffer from the predatory practices of speculative investors who impose intolerable burdens on residents. Each country responds differently, but two notable cases stand out for their successful strategies in curbing real estate speculation.

Singapore, often cited for its disciplined governance, has gradually increased taxation on foreign real estate transactions: starting with a 10% levy in 2011, then 15% in 2018, rising to 20% in 2023. For non-resident foreigners, the stamp duty is now a staggering 60% of the property’s value.

Switzerland, on the other hand, takes an even stricter approach, not merely raising taxes but outright restricting access to property ownership. The Lex Koller, enacted in 1983, effectively prevents non-resident foreigners from purchasing real estate, with very few exceptions. The law enforces a general ban on property purchases by non-residents (except in cases of inheritance or specific economic interests). Additionally, each canton is subject to an annual quota for foreign residents acquiring property, and resales are restricted for several years to prevent speculation. Foreigners can only buy property in a limited number of designated tourist zones. The impact? In 2024, only 1.5% of housing acquisitions in Switzerland were made by foreigners.

With these new measures, Spain is sending a strong signal to foreign investors: the government intends to reclaim control over its housing market and prioritize the needs of its citizens. Forgive me for invoking Keynes once again, but his reflections on the phenomenon of “poverty amid abundance” seem strikingly relevant—when people are unable to find housing, even as unoccupied properties stand in surplus.