Housing; Spain is particularly exposed
Its troubles started with the 2008 financial crisis, which saddled the banking system with some €200 billion ($240 billion) in bad loans at its peak.
As lenders collapsed and unpaid debt was transferred from one institution to another, money for new construction dried up. That collided with Spain becoming the euro zone’s fastest-growing major economy since 2022 and migration steadily increasing the population.
The Covid pandemic stalled a reckoning as the government forbid evictions of vulnerable residents.
Known as the “social shield,” the measure was initially valid for 12 months, but as the problem intensified, Spain’s Socialist-led minority government managed to extend it every year since.
Critics say that by forbidding evictions of vulnerable tenants while not doing enough to ease housing shortages, the measure has created incentives for strapped tenants to stop paying.
Gemma López is one of these strapped owners. In 2022, the 44-year-old started renting out her parents’ apartment in Madrid’s Vallecas district to repay the mortgage she had also inherited. Soon, tenants stopped paying
As the process drags on in Spain’s overwhelmed legal system, she is struggling to pay the mortgages on the rental unit as well as her own home.
“They are bankrupting me,” she said. “We are not large owners or vulture funds or speculators. We are normal people, working people.”
Bloomberg February 25, 2026
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