However, it exacerbated housing purchase difficulties for locals.

Bowing to the increasing pressure to address the housing crisis, Spain announced the withdrawal of its “Golden Visa” scheme, following the footsteps of numerous other European nations. This program had offered wealthy foreigners the opportunity to purchase real estate within the country. However, the acquisition of high-priced properties significantly reduced the local citizens' chances of securing housing, inadvertently inflating real estate prices across the board.

Alongside Spain, Portugal, Greece, and Ireland were among those severely impacted by the 2012 European debt crisis, facing a dire need for cash and investments, making the attraction of foreign real estate investors seem like an obvious solution.

The introduction of the Golden Visa was aimed at revitalizing these economies and covering budgetary deficits, proving to be a significant economic success.

Spain issued 14,576 such visas to real estate investors who spent at least half a million Euros in the country.

Moreover, the visa facilitated non-European citizens to potentially reside in the country for up to 5 years, often without the need for a permanent presence. Investors poured in from Russia, China, the Middle East, the United Kingdom, and the United States in large numbers.

END OF THE GOLDEN VISA

Nevertheless, the high prices pushed a significant portion of the local population out of the real estate market. In response, several European countries, including the Spanish government, decided to terminate the visa program to mitigate the damages inflicted on the housing market. Portugal, too, after reaping more than 5.8 billion Euros in investments, backs the reduction of speculative real estate purchases, endorsing more affordable housing through rental caps and transforming commercial properties into residential spaces.

Ireland called off its visa program last year. Greece, on the other hand, continues to leverage the Golden Visa opportunity, raising the investment threshold from 500,000 Euros to 800,000 Euros in Athens and popular islands like Santorini and Mykonos, citing the 4.3 billion Euros in investments garnered over just two years, from 2021 to 2023.

Due to the European debt crisis, property owners in these countries preferred foreign buyers and renters over locals, anticipating higher profits, escalating tensions further. Short-term property rentals rendered rents unaffordable in city centers, and properties purchased under the visa scheme were often converted into vacation homes, further reducing the number of affordable homes—reported Laura McDowell, an employee at an Athens-based real estate agency. McDowell added that Chinese investors were particularly drawn to the Golden Visa scheme, often paying in cash, and were the ones renovating most buildings. In Spain, Chinese and Russian investors made up about half of the visa applicants.

BALANCE

Nevertheless, countries offering the visa program must strike a balance between economic benefits and protections against potential risks. The Spanish government plans to build 40,000 social housing units for people with limited resources as part of a comprehensive plan to restore affordable housing.

However, as the financial crisis subsided, wages failed to keep pace with the growth of the real estate market. The gap between monthly wages and rental fees has widened to record levels in recent years, making home ownership a continued dream for most—a report by The New York Times concludes.