Demand For Rental Properties Rises & Prices Soar
29 May 2017 – Expansión
Rental homes have become the most profitable and successful option in the residential investment sector. 80% of owners who put a home up for rent last year managed to let it without any problem, a percentage that is much higher than those who wanted to sell their property, 33%, according to Fotocasa.
Three out of every ten Spaniards had a direct relationship with the property market in 2016, with the demand for rental housing constituting the activity with the most weight, according to the findings of the “Survey of the housing market in Spain 2016-2017″, published by Fotocasa this week.
“At the moment, demand for rental housing exceeds demand for buying properties: whilst 14% of the population participated in the rental market in 2016, only 10% of Spaniards participated in the purchase market; and the percentages of people looking for rental homes (5%) and to buy homes (6%) are very similar”, said Beatriz Toribio, Head of Research at Fotocasa.
The strong growth in demand, coupled with the rigidity of the supply of rental homes, have led to blocks of unmet demand and important increases in prices over the last few months, according to the experts. In Spain, on average, rental prices have risen by 10% in the last year. That figure is higher in large cities such as Madrid and Barcelona, which account for approximately 50% of demand for domestic rental properties, according to Solvia.
“The two regions are where rental prices have grown by the most in the last year, specifically, by 17% in Cataluña and by 12% in Madrid”, said Toribio. The price per square metre of a rental property in Cataluña is €11.85/m2/month, whilst in Madrid, the price is €11.22/m2/month.
Rental prices have been growing continuously in these two areas of Spain for the last 34 months; meanwhile, they have been rising in Andalucía and Valencia for the last 27 months. The evolution of these cities is explained because they account for a higher supply of employment, which attracts young people, who are the main consumers of rental homes. The changes in the new generations have modified the real estate sector in Spain: 33% of people who are looking for a home choose a rental property, according to the Housing Observatory. In some areas such as Valencia, that percentage can exceed 50%. The profile of the people who prefer to rent are the so-called Millennials, a segment of the population that is going to continue to grow: they are expected to move out of home, generating a need for 520,000 rental homes over the next 3-5 years.
Original story: Expansión (by D. Esperanza and R. Ruiz)
Translation: Carmel Drake