There is much more room in the main cities of Spain. The new neighborhoods that are being planned, with low-rise buildings, large, wide avenues and undeveloped land, represent an opportunity cost in a context of housing shortage marked by a strong disconnect between the creation of new homes and the availability of houses. At least that is what the Bank of Spain believes, which in light of this situation points to greater densification of large towns as a formula that will help partially alleviate the situation. Cities and the real estate sector have been talking about it for some time now. And the banking supervisor puts figures on the phenomenon in its latest annual report: it has calculated that a more intensive use of developable land would allow the construction of between 500,000 and 1.2 million additional homes in the six main urban areas of Spain, a potential that would be concentrated mainly in Madrid and Barcelona.
Both architects and real estate developers agree that this growth margin should be interpreted as a theoretical scenario and warn that, without a profound reform of urban planning processes and without new investments in infrastructure and public services, densification would hardly have short-term effects on the access crisis that is ravaging the country. Despite this, the supervisor's calculations help quantify part of the residential potential that remains hidden in Spain.
The organization's diagnosis is based on a comparison between the cities already built and the new urban developments that are underway. According to the report, the municipal plans plan to build the new neighborhoods with a building density significantly lower than that which exists on the urban land already built. In areas such as Valencia, Zaragoza or Seville, the areas that are already consolidated have a density approximately 1.7 times higher than that expected in new developments. This gap is up to 2.5 times greater in Madrid, Barcelona or Malaga.
Increasing the density of these developments would be an alternative that municipalities with land scarcity and residential tension can explore to increase the housing supply. According to these estimates, if the projected areas reached a density similar to that which already exists in the consolidated land, but “in accordance with the densification gradient” of each city, around half a million additional homes could be built. Of them, 67% would go to Madrid and another 21% to Barcelona. For this exercise, the Bank of Spain understands that density tends to decrease as an urban area moves away from the center, so it assumes that developing areas would reduce their density according to that gradient. In a theoretical scenario of maximum densification, in which new developments reached the average levels of already consolidated areas, the potential would range between one million and 1.2 million houses.
Densifying, as explained by Susana Moreno, second vice president of the Superior Council of the Colleges of Architects of Spain (CSCAE), consists of increasing the number of inhabitants. This can be achieved in different ways, whether by “raising taller residential buildings where possible, transforming certain uses, completing urban voids or making better use of plots that are already urbanized,” he points out. There is no single formula, and the appropriate density depends on the characteristics of each territory, he adds.
Densification, furthermore, does not necessarily have to translate into a deterioration in the quality of life. On the contrary, Moreno maintains that a denser city can also be more efficient, since it opens the door for public services to work better, for transportation to be more profitable, for commerce to gain activity and for the consumption of land and resources to be reduced. That is, concentration makes it easier, in principle, for infrastructure and services to serve a greater number of people in a more compact space.
All of this, however, requires greater planning. “If the population of a neighborhood increases, parks, schools, health centers and the rest of the public services must also grow proportionally,” continues the representative of the architects. The Bank of Spain raises a similar warning and reminds that increased densification must be accompanied by adequate planning and financing of transport infrastructure and public facilities. Otherwise, the result may be increased congestion in urban areas.
Real estate developers share that caution. The president of the Association of Construction Developers of Spain (APCE), Xavier Vilajoana, considers that there is room to increase residential capacity through densification actions, but emphasizes that the Bank's figures do not represent immediate production capacity. The density of a development, he maintains, is not set arbitrarily, but rather responds to the balance between housing, mobility, public facilities, free spaces, infrastructure and urban quality. Therefore, not all potential buildability can or should be materialized.
Difficulties
The problem, however, appears even before it is possible to consider how many homes fit in a new neighborhood, since the great challenge is the time necessary to transform the land and modify the planning. Moreno points out that “the density of a city is determined by general planning, and in Spain many of these plans are more than two decades old.” The spokesperson for the architects cites a study by the National Markets and Competition Commission (CNMC) from 2025 according to which the average age of these plans is around 25 years. “Our cities and housing needs have changed a lot since then, but adapting those plans is extraordinarily complex.” The reasons are the slowness of processing, the demands of procedures and legal uncertainty.
Modifying the density of a development is, therefore, not a decision that can be applied immediately. Moreno recalls that the urban planning process can take about 10 years, so, if the administrative procedures are not streamlined, its effect on the residential crisis would take too long to be appreciated. The PACE agrees that there is no single obstacle. The regulations establish the parameters of buildability, heights and densities, and any modification requires complex planning review procedures. Added to this is the financing of the infrastructure necessary to support a larger population.
For this reason, the employers consider that modifying only the buildability would be insufficient. More agile procedures, greater coordination between Administrations and legal certainty throughout the entire process would be needed. Also prior planning of infrastructure and public services that absorb the increase in population. “Without soil there is no densification,” summarizes Vilajoana. In his opinion, this strategy can be part of the solution, but it does not replace the need to generate more urbanized land and reduce administrative times.
