Alquiler Seguro: Rents Will Keep Rising In 2016

12 September 2016 – El Economista

Alquiler Seguro forecasts that rental income in Spain will continue to be positive for the remainder of 2016 and will perform “well” next year.

That is according to the CEO of Alquiler Seguro, Antonio Carroza, who has confirmed that the sector “has been recovering” since the beginning of the year, as shown by data from the ARCA Index, which has now recorded four consecutive months of increases following a 1.2% rise in rental prices in August.

Carroza explained that, according to the most optimistic forecast, the recovery will “settle down” during the autumn and will be reflected in prices, where the renewal of new leases is on the rise.

Nevertheless, Carroza clarified that the recovery in the rental sector is subject to fluctuations and to the health of the economy, but that, above all, rental income will continue to be influenced by household income. In this sense, Alquiler Seguro forecasts that updates to rental income “will continue to exhibit positive values during 2016”.

The lack of Government is hampering confidence and affecting prices

Looking ahead to next year, Carroza states that the evolution (of the rental market) will depend on several factors, in a context in which the lack of Government “is hampering confidence in the market and where prices are also being affected”.

In this way, Carroza indicated that the consolidation of the rise in prices will also depend on the situation of political and economic uncertainty. “From an optimistic perspective, we consider that 2017 will be a good year for the rental market”, he added.

Regarding the possibility that the recovery in prices will end up scaring off demand, the CEO of Alquiler Seguro stated that prices are rising gradually, and so he does not think that this situation will lead to a decrease in demand over the medium term.

Shortage of supply and the impact of certain public policies

“The main problem is the shortage of supply in the rental sector”, explained Carroza, who gave the example of cities like Barcelona “where it is clear that the public policies are not helping to boost or increase the supply of homes available for rent”.

For the time being, he considers that “there is a long way to go” before the rental market in Spain reaches the European average, with 35% of all homes being rental properties.

In any case, he notes that young people, belonging to the so-called “No Credit Generation” have already confirmed that they see themselves renting for the next ten years.

Original story: El Economista

Translation: Carmel Drake