Spanish government pledges 23bn euros for affordable housing

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Prime Minister Pedro Sánchez targets the construction of 15,000 affordable rental homes per year to tackle the national housing shortage

Clara Alba

Friday, 20 February 2026, 12:50

The Spanish government has announced a new initiative to build affordable housing to address the severe housing shortage that is particularly affecting young people across the country.

Prime Minister Pedro Sánchez announced this Monday that the sovereign wealth fund known as 'España Crece' (Spain Grows) aims to raise 23 billion euros - a combination of private and public capital - to build 15,000 new homes per year at affordable rents.

This objective was first set in April 2025 when Spain's 'industrial-scale housing plan' (Perte) was presented, but significant results have yet to be seen.

This investment vehicle will be endowed with a total of 13.3 billion euros (10.5 billion from European funds and another 2.8 billion from non-repayable transfers).

However, the government aims to mobilise a total of 120 billion euros (seven per cent of Spain's GDP) in public and private capital. For this housing policy target, the plan is for Spain's Official Credit Institute (the ICO - the body in charge of managing the sovereign wealth fund) to contribute approximately 14 billion euros, with the hope of raising another nine billion euros from private investors.

Such were the details presented by PM Sánchez, surrounded by his hard-core supporters in Moncloa, at Monday's presentation of the 'España Crece' sovereign wealth fund initiative.

Housing deficit

In the midst of the housing crisis, the construction of new homes will be one of the focuses of this funding tool that, according to Sánchez, will aim to mobilise 23 billion euros in public and private funds "to boost supply and move towards closing the housing deficit, financing the construction of 15,000 homes per year" for affordable rental.

"The fund will roll out the red carpet for investors, but not for speculation," stated the PM, adding that the money to fund the investment vehicle will be managed by the ICO and will come from surplus loans from the European Recovery Plan funds.

The idea is to give continuity to the reformist momentum of the EU's economic recovery plan beyond August 2026, when the EU's Next Generation funds dry up, at a time when Spain is still functioning without a set budget.

Housing Minister Isabel Rodríguez highlighted the role of social housing providers, who will assist central government in managing the housing stock. In this regard, various representatives from the construction sector and the social housing movement attended the presentation to advocate for the creation of this investment vehicle.

Manel Rodríguez, partner and CEO of the Salas Group, stressed the need for increased investment to boost social housing. Regarding the workforce and the modernisation needed for the sector, industry representatives advocated for public-private collaborations to accelerate industrialisation of the sector.