Canary Islands Housing Projects Stall as Construction Firms Hold Back on New Public Contracts
The Canary Islands’ ongoing housing shortage has suffered another setback after it emerged that no new government-funded public housing construction contracts have been awarded so far this year.
The issue is not a lack of demand for affordable homes. Instead, construction companies are reportedly choosing not to bid for public housing projects, citing soaring building costs, uncertainty over future expenses and a shortage of skilled workers.
Why Are No Companies Bidding?
Industry representatives describe the situation as a “Catch-22.”
While regional and national governments want to increase the supply of affordable housing, many builders believe the current contract system leaves them carrying too much financial risk.
Construction firms say they are facing:
- Rising prices for building materials.
- Increased fuel and transport costs.
- Higher labour expenses.
- A shortage of skilled tradespeople.
- Difficulty predicting costs on projects that can take several years to complete.
Without mechanisms to adjust contract values if costs increase during construction, many companies have decided that bidding for public projects is simply too risky.
A Wider Problem Across Spain
The challenges facing the Canary Islands reflect a growing issue across Spain.
According to Spain’s construction industry association (CNC), more than 1,100 public works tenders went without any successful bidders during the first half of 2026, delaying projects worth over €700 million. Social housing developments are among the schemes being affected.
Many of the unawarded contracts are for smaller regional and local authority projects, but larger developments have also been impacted.
What Does This Mean for the Canary Islands?
For residents, the delays could mean that plans to increase the stock of affordable homes take longer than expected.
Housing availability remains one of the biggest issues facing the Canary Islands, with strong population growth, high demand and continued pressure from tourism contributing to rising property prices and rental costs.
Without construction companies willing to take on government-funded projects, new housing developments may continue to be delayed until a solution can be found that makes contracts financially viable for builders.
Will the Situation Improve?
Industry groups are calling for changes to public procurement rules that would allow contract prices to be reviewed if construction costs rise significantly during a project.
Supporters argue this would encourage more companies to bid for public housing developments and help governments deliver much-needed affordable homes.
Whether those changes are introduced remains to be seen, but until then, the shortage of new public housing across the Canary Islands is likely to remain a significant challenge.
