Europe’s large developers agree that affordable housing is now the residential investment with the best balance between return and risk: demand in Europe could reach around two million homes this year, while only 1.5 to 1.6 million will be built. On the Costa del Sol that segment has all but vanished from supply: just 8.8% of the homes for sale in our portfolio cost €300,000 or less, and among new builds it is 19 out of 464.
The conclusion came out of the panel on the European residential market at The District, the real estate event held at IFEMA Madrid from 22 to 24 September. Executives from developers, investors and consultancies in Spain, Portugal, Italy, Germany and the Netherlands took part, and they all repeated the same message: there is plenty of capital to build affordable housing, but it needs land, fast permits, reasonable taxes and rules that do not change with every government.
Why do developers say demand for affordable housing is infinite?
“Demand for affordable housing is infinite,” said Javier Kindelán, real estate partner at PwC and former vice-president of CBRE. His arithmetic is simple: if Europe needs around two million homes and completes between 1.5 and 1.6 million, the shortfall grows by half a million homes a year.
The speakers put the spotlight on southern Europe: Spain, Italy and Portugal are drawing a lot of capital because of their demographics and because demand is expected to keep growing, above all for homes at prices that middle-income families can afford. That is why institutional capital is turning to this segment: the margin is lower than in other assets, but so is the risk, because there is always someone waiting to buy or rent.
The speakers acknowledged that they want to invest more in affordable housing than in offices or logistics, precisely because of its lower risk. For Kindelán it is, from an institutional point of view, the best risk-adjusted investment, and he expects a good cycle for the sector over the coming years.
What is holding back the construction of affordable housing in Europe?
The interest is there, but developers set conditions. These were the four obstacles mentioned most often:
- Shifting rules. Gonçalo Cadete, chief executive of the Portuguese developer Solyd, explained that regulation itself is not the problem; what drives capital away is a government changing a rental law that the previous one had left working.
- Projects that are too small. Harm Janssen van Leeuwen, chief executive of BPD Europe, argued for developing large sites with standardised construction and different types of homes, so that open-market homes help to finance the affordable ones.
- Slow land and permits. Keyvan Tabatabai, of the Italian firm Immogroup, pointed to the lack of serviced land, planning and permits, and also asked that new rules not be applied retroactively.
- Taxes. According to Kindelán, direct and indirect taxes make up between 30% and 40% of the final price of a home in Spain, a lever that governments could use to make housing cheaper.
The Netherlands served as a warning: the government capped rents, which helped middle-income tenants, but investing in homes to rent out stopped being attractive. To attract institutional capital, which can choose between countries and asset classes, taxation has to work in favour of affordable housing.
How much affordable housing is for sale on the Costa del Sol?
The new Andalusian Housing Act (Law 5/2025, in force since January 2026) provides a definition: a home is affordable when buying or renting it costs less than 30% of the income of a household earning no more than seven times the IPREM, the public income benchmark used for housing aid. With the 2026 IPREM (€8,400 a year), the income ceiling is €58,800 a year, so the mortgage payment or rent should not exceed about €1,470 a month.
At the average interest rate on home mortgages in July (3.01%, according to the INE) and over 30 years, €1,470 a month covers a loan of about €348,000. If the bank lends 80%, the home should cost no more than about €435,000, and the buyer would need to put down more than €115,000 between the deposit and taxes. That is the best possible case: the household with the highest income the law allows.
Using those two thresholds, €300,000 and €435,000, this is how the homes for sale in our portfolio break down (excluding plots and commercial premises, September 2026):
| Municipality | Homes for sale | Median price | Up to €300,000 | Up to €435,000 |
|---|---|---|---|---|
| Marbella | 2,009 | €980,000 | 1.6% | 10.0% |
| Estepona | 1,327 | €639,000 | 6.1% | 20.6% |
| Mijas | 1,098 | €550,000 | 10.4% | 35.2% |
| Fuengirola | 655 | €567,000 | 10.4% | 31.1% |
| Benahavís | 572 | €1,017,500 | 3.0% | 9.1% |
| Benalmádena | 374 | €622,500 | 12.0% | 30.5% |
| Malaga | 355 | €596,000 | 12.1% | 33.2% |
| Manilva | 310 | €360,000 | 33.2% | 64.5% |
| Torremolinos | 153 | €510,000 | 18.3% | 37.9% |
| Costa del Sol total | 7,858 | €659,475 | 8.8% | 25.2% |
Only one in four homes for sale falls below the most generous ceiling, and fewer than one in ten costs €300,000 or less. In Marbella and Benahavís, homes under €300,000 are almost token. Among the towns in the table, the highest share is in Manilva, where a third of supply falls within that price, followed by Torremolinos, although Mijas has the largest number of such homes, 114. In new builds the gap is even wider: 19 out of 464 homes.
What is Andalusia doing to attract investment in affordable housing?
Much of what the European developers asked for is already in the Andalusian law. The exception is taxes, which do not change:
| What developers are asking for | What Andalusia offers in 2026 |
|---|---|
| Available land | A land bank for affordable housing and public rental homes on vacant public amenity plots (Law 5/2025, arts. 12 and 24) |
| Faster permits | A Project Acceleration Unit for developments with at least 250 subsidised homes or more than 500 homes, and provisional subsidised-housing approval deemed granted after three months without a reply (arts. 25 and 66) |
| Public-private partnership | Surface rights and concessions on public land to build and manage subsidised or affordable rental housing (arts. 13 and 96) |
| Stable rental rules | No stressed areas declared: there is no cap on the initial rent of new contracts |
| Lower taxes | No change: 7% transfer tax on resale homes and 10% VAT plus 1.2% stamp duty on new builds |
The framework is favourable for investors, but its effects will be slow to arrive: years go by between allocating land and handing over the keys. Meanwhile, urban land in the province of Málaga is at record highs and the shortage of supply keeps prices up.
What does it mean for buying or investing on the Costa del Sol?
- If you are looking for your first home, the band below €300,000 is narrow and fiercely contested: it pays to have your mortgage pre-approved and to look at resale homes in towns such as Manilva or Torremolinos, or inland.
- If you invest to rent out, the supply shortage underpins long-term rental demand and in Andalusia there is no cap on the rent of new contracts, but the gross yield depends heavily on the purchase price.
- If you buy off-plan, remember that institutional capital is also competing for land: that makes new builds more expensive and adds value to developments that already have a building licence.
In short: why does this debate matter on the Costa del Sol?
The big European developers do not expect the housing shortage to close any time soon, which is why they are backing the affordable segment: it leaves less margin but offers more security. On the Costa del Sol that segment barely appears in the supply, which explains the pressure on mid-priced homes and why the entry price keeps rising. If you are thinking of buying, selling or investing, we can help you find the opportunities that are still left below those thresholds.
Frequently asked questions
What counts as affordable housing in Andalusia?
Under the Andalusian Housing Act (Law 5/2025), a home is affordable when buying or renting it costs less than 30% of the income of a household earning no more than seven times the IPREM. In 2026 that means an income of up to €58,800 a year and a mortgage payment or rent of about €1,470 a month.
Why do investment funds put money into affordable housing?
Because Europe builds fewer homes than it needs, and demand from middle-income families is assured. The margin is lower than in luxury housing, offices or logistics, but the risk of running out of buyers or tenants is very low.
Are there homes for under €300,000 on the Costa del Sol?
Yes, but few: in September 2026 they made up 8.8% of the homes for sale in our portfolio, 689 out of 7,858. Among the main coastal markets, Manilva stands out at 33%, followed by Torremolinos at 18%; in Marbella they are under 2%.
Are there stressed areas with rent caps on the Costa del Sol?
No. The Andalusian regional government has not declared any stressed residential market area, so the initial rent of new contracts is freely agreed between landlord and tenant.
What taxes do you pay when buying a home in Andalusia?
On resale homes, transfer tax (ITP) at 7%, reduced to 6% for a main home of up to €150,000 and to 3.5% for buyers under 35 and other groups, subject to price limits. On new builds, 10% VAT plus 1.2% stamp duty (AJD).
What next? The most useful thing after reading is to look at the real market: browse properties by city or tell us on WhatsApp what you are looking for — area, budget, timing — and we will prepare a tailored selection, with no obligation.
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