Spanish Middle Class Shrinks Since Crisis

Spanish middle class shrinks since crisisAt the worst moment of the crisis, around a third of Spain´s middle class households had difficulties in paying unexpected expenses or getting to the end of the month

CaixaBank Research | In Spain, middle class incomes fell with the crisis, although on average they suffered less than the rest of the population. However, in recent years they have only recovered part of the lost territory. With the crisis, middle class households saw their income reduced less than the rest of the population. Concretely, their income reduced 8.5% between 2008 and 2013, while lower class incomes fell 13% and upper class incomes 13.2%.

In 2017, a middle class adult in Spain earnt on average 18,100 euros per year, having recovered more than 1,000 euros compared to the minimum received during the crisis. Even so, his income remains below the maximum achieved before the crisis (18,400 euros in 2008).

At the worst moment of the crisis, around a third of Spain´s middle class households had difficulties in paying unexpected expenses or getting to the end of the month. The situation has improved recently: in 2008, almost 20.3% of middle class households said they had difficulties in getting to the end of the month, already below the percentage for 2008 (26.3%).

The percentage of middle class households who have serious material needs at any moment is reduced. The percentage who delay the payment of water, electricity or gas bills or consumption loans is much lower than the lower class. At the height of the crisis, 7.8% of middle class households delayed paying the mortgage, compared to 21.5% of poor households who did so.

Home ownership

Home ownership remains an important characteristic of the Spanish middle class, although the percentage of home rental is increasing.

The majority of the middle class in Spain still owns its own home (72.9% in 2018), a much higher proportion than the lower class (64%). However, in the last five years, the percentage who rent has increased by 5 b.p., to 15.5% in 2018 (26% of the lower class rented their home in that year).

In 2018, middle class households who lived in rented accommodation on average dedicated 23.5& of their income to rent, a greater financial effort than those middle class households with mortgages (17.6%). For lower class households, the effort to pay the rent was even greater (26.8% of income), and was equally greater than those paying mortgages (21.9%).

Middle class households with mortgages dedicated a smaller percentage of their income to paying the mortgage in 2018 than in 2013. In concrete, the average mortgage share of a middle class family fell from 512 euros to 451 euros in 2018, partly because of more favourable financial conditions.