23 February 2016 – Expansión
Rental housing represents a safe investment / Average rental prices increased by 3.6% in Spain in 2015, driven by a rise in demand. Price rises were recorded in every autonomous region, with the exception of País Vasco, something that has never happened before.
Spain is a country of property owners. Renting is not the preferred option. Specifically, one in every five homes is rented out, a figure that falls well below those recorded in other European countries, such as Switzerland, Austria, Denmark and Germany (all exceed 35%). Nevertheless, the percentage of renters – which account for around 19% of total demand at the moment, although the Bank of Spain considers that the figure is more like 15% – represents a significant increase since the real estate boom years, when rental housing accounted for just 11.4% of the total stock.
More than 3.5 million of the 18 million primary residences in Spain are rented out. If we also include holiday homes, that figure increases to almost 5 million. During 2012, 2013 and 2014 alone, 1.1 million additional properties were incorporated into the rental market. Why? Because the crisis drove out hundreds of thousands of Spanish families from the market to buy. And that demand has moved to the rental market, where it is driving up prices.
Rental properties have become more expensive in every autonomous community, with the exception of País Vasco, where prices decreased by just 0.3%, according to year end analysis performed by the real estate portal Fotocasa. It is the first time that rental prices have increased in 16 autonomous communities since the portal created its statistical database, nine years ago. The database is used by the Bank of Spain, in the absence of official sources.
Clearly, the evolution of average rental prices in Spain changed “significantly” in 2015…moreover, the YoY variation recorded at the end of 2015 (3.6%), was also the highest ever in the history of the index. “This general increase in prices is the result of the expansion of the rental market in Spain in 2015; increasingly more people are renting homes, not only because they cannot afford to buy a home, but also because there has been a change in their mentality in favour of renting”, says Beatriz Toribio, Head of Research at the real estate portal.
“In addition, the high returns offered by this market have led many investors to buy homes in order to lease them out”, adds Toribio.
Cataluña was the region that experienced the highest increase in rental prices, up by 10.7%. Rental prices increased all 10 of Barcelona’s municipalities. The average price there stood at €13.3/m2/month.
In the Community of Madrid, the YoY variation at the end of 2015 amounted to 6.5%, which represents the highest increase in the history of the index. In the case of Madrid capital, the rise amounted to 6.9%, where the average monthly rent stood at €11.2/m2. Moreover, rental prices rose in all of the capital’s districts for the first time in nine years.
“In general, prices will stabilise in 2016 because the rental market is here to stay in Spain. But its evolution will continue to be very uneven, with rental prices continuing to rise in the main cities on the one hand, but continuing to fall in smaller towns and in neighbourhoods on the outskirts, as well as in regions with low economic activity”, concludes the Head of Research at Fotocasa.
Rental prices in Spain reached their historical high in May 2007, with a value of €10.12/m2/month. Since then they have recorded a cumulative depreciation of 30.7%. The communities that have experienced the greatest decreases are: Aragón (-40.6%), Cantabria (-36.1%), Castilla-La Mancha (-35.5%), Valencia (-34.4%) and Murcia (-32.3%). (…).
Original story: Expansión (by J. M. L.)
Translation: Carmel Drake