Madrid versus Latin America: Where is housing more affordable?

For the price of one square metre of housing in Madrid, you can buy almost two in central Mexico City and nearly three in Buenos Aires, Bogotá or São Paulo. But higher property prices do not necessarily mean a heavier burden on local wages. ADVERTISEMENT ADVERTISEMENT The key question is how much of their income locals need to spend to afford a home. If you compare rents with wages, the gap shrinks and in some cases even flips. In the Madrid region, renting an 80-square-metre flat at December 2025 asking prices would have absorbed 71% of the average gross salary advertised on InfoJobs that year, according to a study by Fotocasa and InfoJobs. In Buenos Aires, a two-room apartment comes to almost 80% of an average worker's income. And in parts of the Santiago metropolitan area, anyone on the minimum wage can end up spending between 78% and 96% of their take-home pay on the rent for a small flat. These measures illustrate the pressure on incomes, although differences in flat sizes, geographical coverage and wage definitions mean they are not directly comparable. A commonly used affordability benchmark is to spend no more than 30% of income on rent. Taking Spain's modal salary (the most frequently recorded salary, rather than the average), which was €16,520 in 2024, and dividing it by 12 gives approximately €1,377 a month before tax. Applying that benchmark leaves about €413 a month for rent. At that price, searches on housing portals found nothing available in Madrid. The closest option was €500 for a flat of barely 30 square metres. The exercise produces virtually the same result in Barcelona. For €500, you can find somewhere noticeably larger than in the national capital, but the search returned just three homes. How much housing costs in Madrid Existing homes in Madrid were advertised at an average of €6,471 per square metre in August, according to property website Idealista. This is 2.2% more than a year earlier and below the April peak of €6,619. The slowdown has not reached the cheapest districts: in Villaverde, the borough with the most affordable homes per square metre, prices have jumped 25% in a year. Rents, meanwhile, show no sign of hitting a ceiling. In September, they set a record of €23.4 per square metre a month, 4.8% more than a year ago. A study by InfoJobs and Fotocasa, comparing advertised salaries with asking rents for an 80-square-metre home, put the cost at 71% of gross pay in the Madrid region in 2025, compared with a national average of 50%. The Madrid regional government has not designated any “stressed” housing areas under Spain's Housing Act, which allows rent limits in those areas. Other regions, including Catalonia, the Basque Country and Navarre, have used the mechanism. The national government has also sought to intervene. After parliament rejected two housing decrees on 2 October, the cabinet approved replacement measures on 6 October, including rental contract extensions, limits on annual rent increases and protection against evictions for vulnerable households. The new decrees still require parliamentary ratification. Madrid versus other Spanish cities Madrid is not the most expensive provincial capital for buying a home, although it is for renting. According to Idealista, in August San Sebastián was more expensive: €6,680 per square metre versus Madrid's €6,471. Behind them came Palma (€5,835) and Barcelona (€5,440). For rentals, Madrid led the way with €23.4 per square metre in September, ahead of Barcelona (€20.1) and Palma (€19.6), while the national average was €15.1. At the same time, Madrid’s asking house prices rose 2.2% in the year to August, the smallest increase among the cities compared here. Seville (11.5%) and Bilbao (10.6%) recorded the largest increases. Barcelona, a cap Madrid does not have Barcelona has been officially designated a stressed housing area since 2024. According to the Catalan Land Institute (Incasòl), the average rent on new contracts was €1,137 a month in the first quarter of 2026, 4.7% less than two years earlier. The latest asking-rent figures also show a contrast: rents in Barcelona fell 0.8% in the year to September, while in Madrid they rose 4.8%. Supply remains contested. In the first quarter, 8,156 contracts were signed in Barcelona, 17% fewer than in the same period of 2024. The regional government counters that the number of active contracts for regular residential rentals across municipalities with rent caps has increased by 20,994 since the measure was introduced. Idealista's spokesperson argues that advertised supply is falling most sharply in the most heavily regulated markets. Housing costs still stretch wages across Spain San Sebastián, the priciest provincial capital for buying, has seen advertised rents fall by 2.5% in a year. In Bilbao, advertised rents are down 0.3%, although sale prices are up 10.6%. The city has been declared a stressed area until October 2028. In Valencia, which, like Madrid, has no declared stressed areas, rents are just 0.5% below their all-time high. Meanwhile, Seville's sale prices, despite a rise of 11.5%, remain 12% below the 2007 peak, when prices reached €3,322 per square metre. Palma has seen the sharpest rent increase among the cities compared here, with prices up 7.3% to €19.6 per square metre. The Balearic Islands are the most expensive region in which to buy (€5,595 per square metre). Despite these differences, renting remains expensive relative to wages. According to InfoJobs and Fotocasa, renting an 80-square-metre home at the end of 2025 would have absorbed 76% of the average gross salary advertised on InfoJobs in Barcelona province, 72% in Madrid province and 64% in the Balearics. Latin America compared: Lower prices, but homes still out of reach Mexico City is the most expensive Latin American city surveyed in Deutsche Bank’s Mapping the World's Prices 2026 report, which compares 69 cities worldwide. City-centre homes cost €3,441 per square metre, followed by Rio de Janeiro (€3,264), Santiago (€2,507), São Paulo (€2,397), Bogotá (€2,329) and Buenos Aires (€2,328). These figures are below Madrid’s August asking price of €6,471 per square metre, although the comparison mixes Latin American city centres with Madrid’s city-wide market. The picture changes when you set rents alongside minimum wages. In Madrid, an 80-square-metre flat at Idealista's average asking rent costs about €1,872 a month, roughly 1.3 times the minimum wage, equivalent to €1,424.50 gross a month when spread over 12 payments. In Mexico City, the average rent for a two-bedroom flat of 65 square metres is about 2.3 times the monthly minimum wage. In Buenos Aires, the rent on a two-room, 50-square-metre flat also exceeds twice the minimum wage, and in Bogotá the average asking rent is about 2.1 times the monthly minimum wage. The flat sizes differ, but the figures illustrate how lower prices can still leave housing beyond a low-paid worker’s reach. Five cities, five housing crises Behind these affordability pressures lie different policies and housing conditions. Mexico City and Colombia limit annual rent increases, while Argentina has relaxed rental rules. The following examples show how these approaches sit alongside the pressures on local incomes. Mexico City: Rising rents despite limits on increases Asking rents rose 9.6% in the year to June, more than double inflation, according to the Inmuebles24 index. A two-bedroom flat costs an average of 21,921 pesos (€1,069) a month. Nearly two million people, one in four inhabitants, live in rented housing, according to the city government. Buying is even further out of reach. A calculation by the financial publication 'Expansión' estimates that a monthly income of around 85,800 pesos (€4,187) is needed to buy a 60-square-metre home, almost nine times the 2026 minimum wage. To improve affordability, the city already has a rent cap. The Supreme Court has upheld a rule limiting annual increases in agreed rents to the previous year's inflation. For 2026, that cap is 3.69%. But it only applies to existing contracts. Meanwhile, the indices compiled by property portals track flats coming onto the market. Buenos Aires: Rents after deregulation Argentina took the opposite path. Javier Milei's decree scrapping the Rent Act came into force at the end of 2023, allowing rental terms to be negotiated freely. Following deregulation, the supply of rental flats in the capital surged. Advertised supply in Buenos Aires is now 3.4 times greater than at the low point in February 2023. Asking rents rose 19.2% in the first eight months of 2026, below estimated inflation of around 21.5%. A two-room flat costs 886,527 pesos (€516) a month, close to 80% of what the average employed worker in Argentina earns, 1,104,227 pesos (€643), according to Indec, the national statistics office. Buying is another story. A two-room flat on the market costs around €116,000 on average. According to a calculator by the Argentine daily La Nación, buying a 50-square-metre flat, depending on the neighbourhood, requires between six and 35 years of a person's entire income. São Paulo: Rent weighs on low-income households São Paulo has the highest asking rents of any Brazilian state capital, at 65.36 reais (€11.2) per square metre in August, according to the FipeZAP index. Asking rents rose 5.74% in 12 months, outpacing inflation at 4.22%. Asking prices for houses in July were above 12,000 reais (€2,042) per square metre. High rents are also the largest component of Brazil’s housing deficit. An estimated 5.77 million households in Brazil, representing 7.4% of the total, needed better or more affordable housing in 2024, with high rents the biggest reason. In South America's biggest economy, 3.59 million low-income households spent more than 30% of their income on rent in 2024, accounting for nearly two-thirds of the country’s estimated housing deficit. The state of São Paulo accounts for 26.9% of those households. Bogotá: Rent limits in a tight market In Colombia, a 2003 law limits annual rent increases to the previous year's inflation, setting the 2026 cap at 5.10%. Monthly rent cannot exceed 1% of the property's value either. Even so, the market is highly strained. Bogotá’s rental vacancy rate is just 1.9%, and an average apartment was advertised in the first quarter at 3.76 million pesos (about €1,035) a month. That is more than double the 2026 minimum wage of 1,750,905 pesos (about €482), following a 23% increase. The minimum-wage rise also pushed up the maximum permitted price of social housing. That ceiling is tied to the minimum wage and has risen 76% in four years. At the start of the year, the government published a draft decree to stop minimum-wage increases from automatically raising that price ceiling. Santiago de Chile: 11 years' income to buy a home A Chilean family on an average income would have to spend everything it earns for 11.4 years to buy a home at the average price, according to a late-2024 estimate from the Chilean Chamber of Construction. Beyond five years, the indicator classifies housing as unaffordable. Renting also puts pressure on low-paid workers. In metropolitan municipalities such as Independencia or La Florida, a two-bedroom flat of under 50 square metres costs between 345,000 and 421,000 pesos a month, according to Fundación SOL. That absorbs roughly 78% to 96% of the take-home minimum wage used in its study. Informal housing adds another layer to the crisis In Latin America, between a fifth and a quarter of the urban population lives in informal settlements, according to CAF, citing UN-Habitat and ECLAC. More than 30% of the urban population lives in inadequate conditions, according to the housing yearbook produced by CAF and the Lincoln Institute. The crisis also affects people who have built their own homes in neighbourhoods without basic services. In Madrid, aside from exceptions such as the Cañada Real settlement, the problem is mainly one of affordability: there are homes available, but often at prices wages cannot support. Across the cities examined, the common challenge is the gap between housing costs and what people earn. Lower prices alone do not make a home affordable if rent still consumes most of a worker’s income, leaving little for other essentials.