Spanish premier says new fund to finance construction of 15,000 affordable homes a year

Spanish Prime Minister Pedro Sanchez said Monday that a new sovereign investment fund will help finance the construction of up to 15,000 affordable rental homes a year.

The investment vehicle, called "Espana Crece," which means Spain grows, is expected to mobilize €23 billion ($25 billion) for housing projects, with €14 billion ($16.7 billion) coming from public financing and another €9 billion ($10.7 billion) from private investors, Sanchez said.

"We have to build more housing, more public and affordable housing, and lack of financing cannot be another obstacle," he said. "We will roll out the red carpet for private investors, but not to speculate with a constitutional right -- rather to build homes for citizens who struggle to access housing."

The government plans to seed the fund with €10.5 billion ($12.3 billion) in unused loans from the European Union's post-pandemic recovery program, along with €2.8 billion ($3.4 billion) in grants. Officials expect the capital to grow through debt instruments and private investment, potentially reaching €120 billion in total funding.

Housing will be one of the main pillars of the fund, alongside business competitiveness, energy transition and digitalization. The government also aims to reuse EU recovery funds before they expire in 2026 and boost investment amid a budgetary stalemate.

The announcement comes as housing costs remain a major concern for Spaniards. According to a January 2026 poll by the CIS public opinion institute, 42.6% of respondents named access to housing as the country's top problem, up three points from the previous month.

Data from Eurostat shows Spanish housing prices rose 12.8% year-on-year in the third quarter of 2025 -- among the highest increases in the European Union and well above the bloc's average gains of 5.5% annually.

Opposition parties have criticized the initiative, arguing it is less a sovereign wealth fund than an expanded version of the state lending agency. The conservative Popular Party has accused the government of using the fund to cover up poor management of EU funds and as a way to save part of the unused recovery loans.

The government, however, says the tool will help sustain investment momentum once the European recovery mechanism ends later this year.