Spain is heading to the polls on Nov. 29 after Prime Minister Pedro Sánchez called a snap election following the defeat of his government’s housing decrees. The election puts Spain’s housing crisis at the center of the campaign, with voters facing soaring rents and home prices even as the wider economy continues to outperform much of Europe.

The snap election will take place against an economic backdrop of expanding GDP, record employment, and unemployment falling below 10%. But inflation has surged to 4.9%, driven largely by higher energy and fuel prices linked to the US-Iran war. The result is a sharp disconnect between Spain’s economic indicators and how households view the economy.

The September Barometer from Spain’s Centro de Investigaciones Sociológicas (CIS), the country’s official public opinion research institute, found that housing was the most frequently cited national problem, at 37.5%, followed by economic problems at 21.6%. When asked about issues affecting them personally, respondents put the economy first at 30.1%, followed by housing at 27.9%. 

The survey also highlighted a gap between perceptions of Spain’s economy and respondents’ own finances: 64.6% rated their personal economic situation as good or very good, while 56.2% rated Spain’s overall economic situation as bad or very bad. 

A similar disconnect appeared in the United States ahead of the 2024 presidential election, when 66% of registered voters told AP-NORC that the national economy was poor, while almost six in 10 said their own financial situation was good.

Snap election puts housing at the center of the campaign

Sánchez announced the Nov. 29 election on Oct. 5, three days after Congress rejected two government decrees designed to address Spain’s housing crisis. The measures included protections against evictions and changes affecting temporary and room rentals.

The PP, Vox and Junts voted against them, helping trigger the snap election that PP leader Alberto Núñez Feijóo had been seeking. After Sánchez’s announcement, Feijóo said, “Finally, the Spanish will decide”– suggesting the election is an opportunity for the PP to return to government, potentially with Vox’s support. Reuters noted that the election could mark the first time since Spain returned to democracy after dictator Francisco Franco’s death that a far-right party could enter the national government.

The defeat came after months of growing public frustration over housing costs and large demonstrations across Spain. Housing has now overtaken other economic and political issues in the CIS survey, making it the clearest economic issue of the election campaign.

Sánchez is going into the election with a difficult political proposition: Spain’s headline economic figures have improved substantially during his time in office, but housing affordability has deteriorated enough to dominate voters’ concerns.

The government has also failed to pass a new national budget since 2023, leaving Spain to operate under successive extensions of the old spending plan, which keeps existing programs funded but limits the government’s ability to set new spending priorities and commitments. Sánchez restarted negotiations for a 2027 budget in September, but failed to secure the parliamentary support needed to advance it.

Inflation reaches 4.9% as energy prices surge

Spain’s CPI rose to 4.9% in September, up from 4.3% in August and the highest rate since February 2023. Core inflation also increased, reaching 3.1% from 2.9%.

INE said September’s acceleration was influenced by higher fuel and lubricant prices, which were falling in the same month last year. Package holidays also fell less than they did a year earlier, adding to the annual rate.

The latest energy shock is being driven by the US-Iran war and disruption to energy supplies, rather than domestic Spanish economic policy. European energy prices have risen sharply as the conflict has affected LNG flows and energy markets.

CaixaBank Research reported that eurozone energy prices rose 18.8% year over year in September, adding more than 1.5 percentage points to the region’s overall inflation rate.

While Spain can influence how much of the increase reaches households through taxes, subsidies and other measures, but it does not control the international energy prices driving the latest surge. The government has nevertheless responded with a third energy package, extending fuel-tax cuts and limiting the increase in regulated gas prices, while pushing for broader EU action on the energy shock.

Spain’s inflation rate stood at 2.3% in January, meaning the September reading of 4.9% is more than twice the rate recorded at the start of the year.

Spain’s labor market keeps breaking records

Average Social Security affiliation increased by 92,327 people in September to 22.44 million, according to CaixaBank Research. Seasonally adjusted employment rose by 180,832 during the month. Year over year, affiliation increased 3.4%.

Foreign workers accounted for 74% of the increase in employment over the past year and now represent 16.2% of all Social Security affiliates, up from 14.2% a year earlier. The exceptional regularization process has contributed significantly to the recent increase.

Registered unemployment did increase in September, rising by 23,587 people to 2.38 million. Even so, it remained the lowest September figure since 2007.

Spain’s unemployment rate was 9.87% in the second quarter, down substantially from 13.38% in early 2023. The improvement is impressive, although Spain continues to have one of the highest unemployment rates in the European Union, where youth unemployment remains particularly high.

GDP growth remains stronger than the eurozone

Spain’s GDP grew 0.7% quarter over quarter in the second quarter of 2026, keeping the economy among the fastest-growing in the eurozone.

Goldman Sachs expects Spain’s economy to expand 2.1% in 2026, compared with just 0.7% growth for the euro area. The bank points to domestic demand, productivity gains and investment among the factors supporting Spain’s stronger performance.

CaixaBank Research reported that gross household disposable income increased 5.5% year over year in the second quarter, while household consumption rose 7.1%. The household saving rate remained at 11.5%, well above its 2000–2019 average of 8.6%.

The figures add to the confusion of why the CIS survey can show relatively strong personal finances but widespread pessimism about Spain’s economy.

Tax receipts reach record levels

Spain’s tax collections are also running at historically high levels. Gross tax receipts increased 7.8% between January and August, reaching about €282.4 billion compared with €262 billion during the same period in 2025.

The increase reflects stronger employment, wages, consumption and corporate activity. But despite the revenue gains, Spain is still operating without a new national budget: the 2023 budget has been extended repeatedly, allowing existing spending to continue but leaving the government without a fresh annual plan for allocating new revenue and setting spending priorities.

President Sánchez began working toward a 2027 budget earlier this year and opened talks with parliamentary groups in September, but the process stalled without enough support in Congress.

Housing remains Spain’s biggest economic concern

Housing protests continued following the high-profile eviction of 87-year-old Maricarmen Abascal on Sept. 23, with housing emerging as a central issue in the snap election.

The CIS survey found 37.5% of Spaniards identified housing as one of the country’s main problems, compared with 21.6% for the economic crisis. When asked about problems affecting them personally, economic concerns ranked first at 30.1%, followed by housing at 27.9%.

This, however, contrasts with their feelings about their personal finances where 64.6% said their own financial situation was good or very good, but 56.2% described Spain’s overall economic situation as bad or very bad.

This gap in perception and reality may be due to the housing crisis. A household can have rising income and stable employment while still finding that buying a home has become less affordable, rents are consuming a larger share of income and younger adults are struggling to enter the property market.

The housing market itself is showing some signs of moderation. CaixaBank Research reported that home transactions fell 7.1% year over year in the second quarter, although 725,000 transactions were still recorded over the previous 12 months. Existing-home transactions fell 9.8%, while new-home sales increased 24%.

Europe’s gas market faces a volatile winter

Energy prices will remain closely linked to Spain’s inflation outlook through the rest of 2026.

Goldman Sachs expects European natural gas prices to average about €70 per megawatt-hour in the fourth quarter, compared with the much lower prices seen before the latest Middle East energy disruption.

The bank also estimates that prices could rise above €100/MWh during the winter peak if LNG flows remain severely disrupted, while a faster normalization of supply could push prices toward €50/MWh.

The impact of energy prices will hit Spanish households in more places than the price of filling the car. Higher energy costs feed into electricity, transport, manufacturing and the cost of producing and moving goods.

What to watch before the election

Spain will get one final inflation reading just two days before voters go to the polls on Nov. 29. With inflation already at 4.9% in September, the figures will give voters the latest snapshot of economic growth and prices as they head into the election.

We’re also watching the first estimate of third-quarter GDP on Oct. 30 that’ll provide an early reading on whether Spain’s strong first-half growth is continuing.

Energy prices, employment and housing data will also remain closely watched during the campaign, particularly as households continue to report relatively strong personal finances despite widespread concern about the broader economy.