28 December 2015 – Expansión
Spain is a country of property owners. You just need to look at the European comparatives to realise that Spaniards prefer to buy than rent. Specifically, jsut one out of every five homes in Spain is rented out, a percentage that falls well below those recorded in other countries in Europe, such as Switzerland, Austria, Denmark and Germany (where rental homes account for more than 35% of the residential market in all cases). The rental market began to take off in Spain when the crisis forced thousands of families out of the purchase market into the rental market, but it has still got a long way to go.
The percentage of homes rented out has increased from 11.4% during the boom years to 18% or 20%, according to sector analysts, although the Bank of Spain reports a more conservative figure of 15%. Therefore, 3.42 million of the 18 million primary residences in Spain are rented out. If we also include holiday homes, that figure amounts to almost 5 million.
Prices, which are now more competitive than ever, have contributed to this situation. The average rental cost of a residential property is now 30% lower than in was in May 2007, according to the IESE-Fotocasa index, which the Government uses since it does not compile any official figures itself, besides CPI.
But, the cost of being a tenant is going up again across all of Spain. The average rental cost recorded its first YoY increase in eight years in November across every autonomous region. Cataluña stood out, with an average rental price increase of 10.6% with respect to November 2014. It was followed by the Balearic Islands (7.8%), Madrid (6.3%) and La Rioja (6%). At the other end of the spectrum, Castilla-La Mancha is the region where prices increased the least, specifically, by 0.7%, followed by Cantabria (1%), País Vasco (1.1%) and Navarra (1.3%). “Rental prices are stabilising and although they are increasing significantly in certain areas where demand is high, in general, they will remain stable over the next few years”, explains Beatriz Toribio, Head of Research at the real estate portal Fotocasa. In terms of the evolution in prices by province, rental price increases were recorded in 26 provinces with respect to October.
We are seeing a gradual change in mentality. In 2011, 70% of Spaniards thought that “renting was like throwing money down the train”, but now 65% regard it as a solid life choice, according to a survey by Fotocasa. In other words, there has been a complete turnaround. “This is partly explained by the crisis, but is also because new generations have a much more favourable attitude (towards rending)”, explains Toribio.
The country’s other major real estate portal, Idealista, predicts that rental homes will increase in weight over the next few years to account for around 25% of the total housing market. “Rental is now undergoing an important stage in its development, despite the classic reluctance to embrace it in Spain”, says Fernando Encinar, Head of Research at the portal.
Original story: Expansión (by J. M. L.)
Translation: Carmel Drake