House prices are usually discussed as sticker shock. That misses the sharper question: did pay keep up?
This chart treats housing as a race between transaction prices and full-time salaries. I take Eurostat’s House Price Index for dwellings bought by households, set 2015 to 100, and divide it by growth in Eurostat’s average full-time adjusted salary per employee.
The formula is simple: house price index / salary growth index - 1. A positive value means house prices outran salaries. A negative value means salaries gained ground.
The interesting part is where Spain lands. Its house prices rose about 60% from 2015 to 2024, while the salary measure rose about 24%, leaving Spain roughly 29% above where it would be if prices had only tracked salaries. The EU aggregate is closer to 15%, so Spain is not merely expensive in isolation; it is well ahead of the European average by this measure.
The split after 2022 is the better story. The EU line peaks and gives back much of the gap as wages catch up and housing cools. Spain never gets that relief.
To see which countries matter, I rank each country’s 2022-2024 move by its 2024 EU27 HPI country weight from Eurostat’s prc_hpi_cow, converting the published per-mille weights into shares. That follows how the HPI numerator of the EU aggregate is built. It is not a full decomposition of the salary denominator, but it is the cleanest honest screen for which national housing moves pull on the EU line.
Spain is basically the whole upward side of that screen. Its salary-adjusted gap widened by +3.98pp after 2022, and Spain carries a 9.82% weight in the 2024 EU27 HPI. That gives it a +0.39pp weighted push. Portugal, Cyprus, Croatia, Malta, and Lithuania together add only about +0.03pp.
So the question is not why Spain alone got worse. It did not. The question is why Spain got worse while being large enough to matter. Banco de España’s 2024 Annual Report gives the blunt answer: strong population growth, household formation, non-resident buying, tourist pressure, better employment, easier financing, and supply that improved too slowly. Demand kept moving. Housing did not catch up.
Portugal is the level story. By 2021, before the interest-rate shock, Portuguese house prices were already about 69% above 2015 while the salary index was up only 20%. That left the salary-adjusted gap at +40.6%. Spain was at +22.3%.
That did not come from one villain. Banco de Portugal points to a dead supply response after the financial crisis: from 2015 to 2023 Portugal built less than half as many new dwellings as in the previous eight years, and between 2013 and 2022 it licensed only 17 dwellings per thousand inhabitants, versus 60 in France and 34 in Germany. Then demand arrived anyway: domestic recovery, immigration, tourism, non-resident buyers, Golden Visas, and non-habitual resident tax benefits. The OECD says the same thing more politely: renewed domestic and foreign demand hit structural housing-market constraints.
Portugal has not kept getting worse in this chart for a more boring reason: since 2022, salaries almost caught the housing move. Portuguese HPI rose about 18.0% from 2022 to 2024, while the salary index rose about 17.4%. Spain’s HPI rose about 12.9%, but salaries rose only 9.4%. Portugal is worse. Spain is still worsening.
The downward row is the rate shock. The European Commission notes that EU house prices fell in 2023 after rising for a decade, because borrowing capacity collapsed in 2022 and 2023 as interest rates jumped faster than incomes. Its earlier housing note says nominal euro-area house prices peaked in mid-2022, with the decline mainly driven by Germany and the Netherlands, while Czechia, Slovakia, Luxembourg, Denmark, Finland, and Sweden were also cooling. In this chart, the same thing shows up as a ratio reversal: prices stop rising or fall, while nominal wages finally catch up.
There is a trap here: 2015 is close to Spain’s post-crash housing trough. Same for Portugal and Ireland. That flatters the size of the rebound. Some of the gap is mean reversion from a wrecked market, not a clean new affordability shock.
Still, the direction matters. Spanish nominal salaries barely kept up with consumer inflation over this period, while homes did something else entirely. And the national number probably understates the pain in Madrid, Barcelona, the Balearics, and the places people actually fight to live.
Ireland is further out. Romania goes the other way, not because the chart broke, but because reported full-time salaries in national currency rose much faster than house prices in a high-inflation catch-up economy. The Netherlands is missing because Eurostat does not publish this harmonised salary series for it; Greece is missing because the required HPI series is incomplete under the selected filters.
This is not a full affordability index. It uses a mean salary, not a median buyer. It ignores mortgage rates. It ignores taxes, savings, deposits, rents, and household structure. But it captures the first brutal filter: did wages earn their way back into the market?
They mostly did not.