Fuller flats, higher rents, poorer renters.

Between 2015 and 2024, immigration added about three and a half million people to Spain's population. In an earlier essay I showed how the country made room for them: not by building, as it had in the 2000s, but by fitting more people into the homes it already had, at higher rents. This essay asks the next question. Who pays for that?

The short answer is: the people at the bottom of the income distribution who rent, and the young. The gain goes the other way, to owners, who are older and better off. A shock that is usually discussed as a question about immigrants turns out, in the housing market, to be a transfer between Spaniards, and a large part of it is paid by the newcomers themselves.

What the second wave changed

A housing market has three ways to make room for new residents: it can build, it can turn empty and second homes into main residences, or more people can share each home. Rents and prices move until those three are enough. How far they have to move depends on how easily the first one works.

In 2003–2008, the provinces that received more immigrants built more: about 0.7% more housing for each 1% added to the population. Since 2015, that response has been zero. Working Paper 001 measures what replaced it. In the provinces predicted to receive more immigrants, the population register shows more people per home, about 0.8% more for each 1% of population arriving, and rents and prices rose. Over 2015–2024, each 1% of population added by immigration raised rents by about 1% and house prices by about 4%, relative to provinces that received less.

Those are averages over a province. They say nothing yet about who inside it bears them. To get there, two more facts are needed: who rents, and how much of their income the rent takes.

Who rents

In Spain, ownership rises steeply with income. In the poorest tenth of the population, half live in a home they own, and 31% rent at market prices. In the richest tenth, 88% own and 8% rent. The rest, more common at the bottom, live in homes rented below market or lent by family or employers, and are shielded from market rents for now.

Poor renters also spend more of what they earn on rent. Tenants below 60% of the median income pay on average 39% of their disposable income in rent; tenants above that line pay 21%. A 1% rise in rents therefore costs a poor renting household about 0.4% of its income, and a better-off renting household about 0.2%.

Multiply the two and the cost of a 1% inflow, averaged over everyone in each income decile, is 13 basis points of income in the poorest tenth and 2 in the richest. Figure 1 shows the whole distribution. About two thirds of the gap comes from who rents, and one third from how much the rent weighs.

A basis point per 1% of population sounds small. But the inflow was not 1%. Over 2015–2024 immigration added 11.8% to the population of Barcelona and 10.5% to that of Madrid, and less than 2% to Badajoz, Córdoba or Jaén. Compared across those provinces, the estimate implies rents about 11% higher in Barcelona than in Badajoz by 2024. For a poor household renting in Barcelona, that is about 4% of its income, two weeks of income every year. For a renting household above the poverty line, about 2%. For an owner, nothing on the cost side, and a home worth more.

Figure 2 makes the same calculation for each province, compared with a province that received the national average.

Young and old

Income is one line through the population. Age is another, and it is sharper. Half of households headed by someone under 30 rent at market prices, and a third of those headed by someone aged 30 to 44. Among households headed by someone over 65, 5% rent, and 82% own their home outright, with no mortgage left to pay.

The 4% rise in house prices for each 1% of population is the other side of the ledger. It accrues to every owner, and owners are concentrated among the old and the better off. It is a gain on paper, realised only when the home is sold or borrowed against, and part of it reflects buyers betting on more growth to come rather than higher rents today. But its direction is the opposite of the rent bill: from the young to the old, from those looking for a home to those who already have one.

Inside the poorest tenth

The bottom of the income distribution is not one group. Half of the poorest tenth own their home, many of them older households who bought decades ago. For them, the second wave has meant a home that is worth more and no extra cost. The third who rent at market prices are more likely to be young, to have moved recently, or to have arrived recently: most people who have just come to a country rent. For them it has meant higher rents on a budget where rent already takes two fifths of income.

So the most accurate description is not that the poor pay. It is that poor renters pay, and that the line that matters at the bottom of the distribution is tenure, not income. That is also why part of the bill is paid by the second wave itself. The newcomers compete for the same flats as young Spaniards and earlier immigrants, and they arrive into exactly the segment where the squeeze is tightest.

The cost that does not show up

Rents are only the part of the bill that can be measured in euros. The rest is paid in space. When construction does not respond, a growing market clears partly because households accept less of it: young people stay longer with their parents, flats are shared by more adults, families stay in homes they have outgrown. The paper finds that, to fit the rent, construction and population data together, space per household has to be about four times as responsive to rents as standard calibrations assume. Spain absorbed the second wave less by paying more than by living closer together.

That cost falls on the same people as the rent: those searching for a home. A household with a long-standing contract or a home of its own does not have to accept less space. A household looking for its first flat does. There is a hint of this in the rent data too. In Catalonia, where rents were capped in 2024, the paper finds that rents on new contracts responded strongly to inflows while those on existing contracts did not, though that comparison rests on a single regulated year. Regulation of that kind changes who bears the shock, not its size: it protects sitting tenants and shifts the pressure onto those signing now.

Which margin should pay

In 2003–2008, when the provinces that grew built in step with their population, the cost of making room was paid largely in bricks: someone built the homes, and the newcomers and the young bought or rented them. The construction boom ended in a bust whose bill Spain is still paying in other ways, so this is not nostalgia for 2006. But it shows that the incidence of a population shock is not fixed. It depends on which margin absorbs it.

The model behind the paper makes the same point in numbers. Raising the elasticity of supply from the level calibrated for Spain to that of a moderately responsive market cuts the price response to the same inflow by about a third, and does so for every future shock, not just this one. Public housing also lowers it, though part of it displaces private building that would have happened anyway. Reducing the inflow lowers rents only by forgoing the population growth itself. Rent caps move the bill from sitting tenants to newcomers.

The second wave is not over, and Spain will need more people, not fewer, as its population ages. If the country keeps making room for them by squeezing rather than by building, the bill will keep landing where it has landed since 2015: on renters at the bottom of the income distribution, and on the young. The question is not whether Spain grows. It is who pays for the homes it does not build.