Ministry of Development: Real Estate Activity is Non-Existent in 40+ Spanish Municipalities

21 April 2019 – El Confidencial

There is barely any real estate activity in more than 100 Spanish municipalities with more than 10,000 inhabitants. In 42, not a single building permit to construct a new home was issued in 2018. Not one. And in another 100, fewer than five permits were issued, whilst in 200, fewer than ten permits were issued.

That is according to data from the Ministry of Development, which reveals the extent of the disparity between the booming areas of Madrid, Barcelona, the Costa del Sol and the islands, amongst others, and the complete dearth of activity in other parts of the country.

Asturias and Murcia are the autonomous regions that are suffering the most where construction activity has been all but suspended. The driving factors are multiple, but a lack of demand is key. Moreover, even where there is buyer interest, there is not enough buildable land to develop, construction costs are high, financing is hard to come by and qualified labour is scarce.

Even at the national level, although 100,000 new home permits were issued last year, that figure is still eight times lower than it was in 2006, when 865,561 new build permits were awarded. And although the experts agree that a healthy market will never see a return to the pre-crisis figures, the volume of new home construction is still well below the 150,000-200,000 benchmark that property developers consider sustainable.

By contrast, in certain parts of the Community of Madrid, lots more building permits were granted last year than during the height of the boom, for example, in Tres Cantos (657 in 2018 compared with 6 in 2006) and Rivas Vaciamadrid (1,345 compared with 831 twelve years ago). There was also a lot of activity in Boadilla del Monte, San Sebastián de los Reyes and Alcobendas. Beyond the capital, more new build permits were granted last year than in 2006 in Pamplona, Lasarte and Santiago de Compostela, amongst others.

Original story: El Confidencial (by E. Sanz)

Translation/Summary: Carmel Drake

Ghost Towns Still Haunt Spain in Property Rebound a Decade After

25 November 2018 – Bloomberg

Juan Velayos’s biggest headache these days is getting licenses fast enough to hand over new homes such as the upscale condos his company is building in the northern suburbs of Madrid.

Less than 60 miles away, Ricardo Alba’s neighborhood tells a different story about Spain’s property market. The fencing instructor is one of only two occupants at a block of apartments whose development was frozen in its tracks when banks pulled the plug on credit.

“The real estate sector’s recovery in Spain is developing at two clearly different speeds,” said Fernando Rodriguez de Acuna, director of Madrid-based real-estate consultancy R.R. de Acuna & Asociados. “While one part of the country is consolidating the recovery of the sector and even expanding, another part of the country is stagnating and is showing few signs of returning to pre-crisis levels in the medium- and long-term.”

A decade after the financial crisis hit, Spain’s real estate recovery is a tale of two markets. Key cities and tourism hot spots are enjoying a fresh boom, fueled by interest rates that are still near historic lows, an economic recovery and a banking system that’s finally cleaning up its act. Private equity firms such as Blackstone Group LP are picking up once-toxic assets worth tens of billions of dollars and parsing out what’s still of value, often using their playbook from the U.S. real estate recovery to convert properties into rentals.

But travel a little beyond the bustling centers, to the outskirts of smaller villages, and ghost towns still litter the landscape — once ambitious developments, often started on agricultural land that was converted into building lots just before the crisis hit. They still stand half-finished, unable to find a buyer.

The “Bioclimatic City La Encina” where Alba began renting an apartment two months ago is one such development. Situated on the edge of the village of Bernuy de Porreros, about 10 kilometers (6 miles) from Segovia, it promised to be Spain’s first environmentally-friendly town, providing solar energy and recycled water for 267 homes, comprised of two-, three-, and four-bedroom chalets and apartments. A faded billboard speaks of the dreams that were sold, including communal swimming pools and gardens for residents who would “live… naturally.”

Today, only about a dozen of the homes are occupied. One street has finished homes but half have their windows bricked up to discourage break-ins, locals said. Alba does have solar panels heating his water, but his electricity comes from the local network. On the far side of the development, trees sprout out of the middle of a street that was never paved. Brightly-colored pipes and cables protrude from the ground. Bags of plaster on a pallet have long hardened.

Spain’s housing crash was fueled by a speculative frenzy combined with loose restrictions and corruption that allowed plots of farmland in rural villages to be converted to feed a demand for homes that never truly existed, said Velayos, who is chief executive officer of Neinor Homes. At the height of the boom in 2006, authorities approved 865,561 new home licenses when even in an economic boom demand is no greater than 250,000 homes, he says.

Banks were handing out loans to developers who had little to lose if a project didn’t find a buyer because the money wasn’t theirs. The result was an almost total collapse of the market and close to $200 billion of soured assets.

About half of them were bought in 2012 by Sareb, a bad bank set up by the government to help lenders. Sareb spent about 50 billion euros to acquire assets that were once valued at twice that amount, mostly loans to developers and real estate. Among the latter are also 97 of the 267 properties at La Encina. None of them are currently for sale as Sareb works through legal issues and construction of many isn’t finished.

Other assets were picked up by deep-pocketed investors such as Blackstone, which has 25 billion euros invested in Spain, according to Claudio Boada, a senior adviser at the firm. The New York-based company — the world’s largest private markets investor — is doing what it did at home after the financial crisis: renting out homes instead of selling them in a bid that fewer people can afford to own. Spain had a relatively high home ownership rate before the crisis but it has since come down.

Blackstone’s Bet

“We’re holding most of what we own and looking to rent it out for the foreseeable future,” said James Seppala, head of real estate for Europe at Blackstone. “There’s a meaningful increase in demand for rental residential around the world, including in Spain, driven by home ownership rates coming down.”

Private equity investors also backed a new breed of real estate developers that are bringing a different rigor to the industry. Companies such as Neinor and Aedas Homes S.A.U. are more tech-savvy when assessing markets, and emphasize industrial production techniques to improve efficiency. They’re behind a surge in licenses for new homes to 12,172 new homes in July, the highest monthly total in a decade.

But demand is uneven: Madrid is enjoying its most robust year of home construction since 2008 with an average of 2,151 licenses awarded per month in the first seven months of the year. In Segovia, just 27 minutes from Madrid on the state-run bullet train, an average of 25 homes licenses have been approved per month in 2018, compared with an average of 180 homes a decade earlier.

The volume of residential mortgages sold in Spain peaked in late 2005 before hitting a low in 2013. Since then they have gradually picked up, with 28,755 sold in August, a seven percent annual increase.

Velayos, chief executive officer at Neinor, said business is starting to pick up beyond Madrid and Barcelona to smaller cities and the coast. His company plans to hand over 4,000 homes by 2021, more than 12 times as many as in 2017. The biggest challenge has been getting licenses approved on time. Velayos had to cut his delivery target for 2019 by a third as often understaffed local councils cause bottlenecks in the production process.

More significantly, Spain’s real estate is now funded by investor’s equity and not credit, said Velayos. Neinor was bought by private equity firm Lonestar Capital Management LLC from Kutxabank SA in 2014 and went public in March 2017. Aedas is backed by Castlelake, another private equity investor, and was floated the same year. Metrovacesa SA, owned by Spain’s biggest banks, held an initial public offering earlier this year.

Shares of all three developers have declined this year at more than twice the rate of the local stock index, a reminder that the market’s recovery remains fragile, with higher interest rates and an economic slowdown on the horizon.

For the Bioclimatic City La Encina, that means it may take longer still until Alba gets new neighbors. Prices for half-finished chalets were slashed by half, according to residents. Some now sell for as little as 16,700 euros, half the cost of a mid-range car.

Alba doubts such cuts will lure buyers. Then again, that may not be a bad thing, he says in summing up the development’s advantages: “It’s very peaceful.”

Original story: Bloomberg (by Charlie Devereux)

Edited by: Carmel Drake

Bank Of Spain: Housing Yields Soar By 10.9% In Q1 2016

18 July 2016 – Expansión

(…). According to the latest data from Bank of Spain relating to the first quarter of this year, the average gross annual return on housing amounted to 10.9% in Q1 2016. Three months earlier, the same indicator amounted to 8.8%, which gives an idea of how much the pace is speeding up.

This gross yield figure measures the combined effect of the appreciation in house prices, plus the income obtained from putting those houses up for rent, before tax. In other words, the figure takes into account not only the amount that each investor obtains from renting out his/her property, but also the amount that he/she would earn from selling it after twelve months, which is the most important information for investors.

Specifically, house prices rose by 6.3% YoY during Q1 2016, whilst rental income generated additional returns of 4.6% over and above the value of the asset. And that profit may increase over the coming years, given that Fotocasa calculates that rental prices increased by 4.8% YoY in June, the second highest rise since 2006.

Moreover, this figure is more significant in the context of depressed interest rates, where investments presented as alternatives to fixed income options are shining. For example, housing yields are six times higher than the returns on 10-year Spanish public debt, which is the reference rate used by the financial supervisor; moreover, housing has also offered a safer refuge against uncertainty than the stock exchanges in recent months. (…).

This gap between housing yields and the returns on other assets means that now is a great time to invest in rental housing, for both individual buyers and investment funds, given that the cost of mortgages are also at historical lows.

In fact, the College of Property Registrars indicates that last year, 12.71% of house purchases were made by legal persons, which shows the interest that housing is sparking amongst companies, due to the double returns it offers.

The business model of these businesses and individuals is clear: obtain fixed income from renting out the asset, for an amount that comfortably exceeds the associated operating costs, and also benefit from the appreciation in the property value, so that they can more than double their returns.

Overall increases

In addition, it is a pretty safe bet, given that house prices are rising in most autonomous regions (and the improvement in the labour market should prolong this rise) and rental prices are rising four times as quickly as purchase prices, according to data from Fotocasa. (…).

The percentage of citizens who prefer to rent rather than buy is increasing, from 19% to 21.2% of Spaniards in 2015. In the last three years, the rental market has absorbed more than 1 million homes and is 42.5% larger. For this reason, investors looking for high returns have thrown themselves into the hunt for properties in established locations, with demand, in order to rent them out.

Location and quality

In fact, the experts recommend paying special attention to the location and quality of housing, because Spain is no longer a homogeneous market…but rather a market evolving at two or three speeds, in which prices have not bottomed out yet or are stable in certain cities and neighbourhoods, whilst prices are clearly recovering in others. (…).

Original story: Expansión (by P. Cerezal)

Translation: Carmel Drake

Fotocasa: Rental Prices Rose By 4.8% YoY In June

18 July 2016 – Expansión

Over the last three years, the prices of most goods and services have remained stable, to the extent that many economists have come to fear that Spain will enter into a period of deflation. Nevertheless, in the midst of these “doldrums”, there is a market where prices have already started to pick up pace: the residential rental sector. According to the latest data from Fotocasa, residential rental prices rose at a rate of 4.8% YoY in June, just two tenths below the historical maximum, recorded in 2006, when the index was first compiled. (…).

As with everything, this market also reflects the two speeds that are being seen in other segments. In this way, prices grew by 15.7% in the Balearic Islands, but remained stable and even decreased in La Rioja, Extremadura and Castilla-La Mancha, reflecting the demographic and tourist pressures in one of the areas and the lack of strength in the others. After the islands, comes Murcia, where rental prices rose by 11.3%, followed by Cataluña (10.7%), Comunidad Valenciana (10.5%) and Madrid (9.9%). All of the other regions fall a long way behind, well below the average.

Something is changing in the rental market. “There is no longer a single market, but rather areas that vary significantly by district and even by street. For example, in Barcelona, rental prices have risen by more than 20% in several neighbourhoods: Gràcia, Sants and Ciutat Vella”, says Beatriz Toribio, Head of Research at Fotocasa. In addition, whilst before the highest rental price increases were seen in those cities with the highest economic growth, now prices are rising by the most in the most popular tourist destinations. That is because tourists are increasingly opting to stay in private accommodation instead of hotels, and increasingly more owners are putting their homes up for rent for this purpose, given that they offer higher returns.

Although this type of housing does not enter into Fotocasa’s calculations, the use of residential properties for this purpose significantly limits the supply of homes, which drives prices up. For example: rental prices rose by 7.1% in the capital of Valencia with respect to last year, but soared by 19.6% in Peñíscola, 21.6% in Gandía, 25.6% in Benidorm and 49% in Santa Pola. (…).

The major exception to this changing pattern in the Canary Islands, where rental prices grew by 3.8%, below the average. That rate of growth was in line with Andalucía (where prices rose by 4.3%, also driven by many towns along the coast), Navarra (where prices also rose by 3.8%), Cantabria and Galicia (3.5% in both cases). There were also significant price increases in Asturias (3.2%), Aragón (3%) and Castilla y León (2.4%).

Finally, prices remained stable or decreased in just four autonomous regions: País Vasco (where rental prices rose by 0.8%), Castilla-La Mancha (0.6%), Extremadura (where they remained stable) and La Rioja –where they decreased by -0.2%.

As a result of the price increases in the last year, Madrid and Cataluña have joined the league of autonomous communities where rents now cost more than €10/sqm, following the path set by País Vasco. These regions are followed by the Balearic Islands (€9.16/sqm) and then Navarra (€7.11/sqm). The cheapest rents are found in Castilla-La Mancha and Extremadura, at less than €5/sqm, followed by La Rioja, Murcia and Valencia (between €5/sqm and €6/sqm).

Original story: Expansión (by P. Cerezal)

Translation: Carmel Drake

Tinsa: Most Homes Bought In 2015 Cost Between €50k & €100k

31 December 2015 – El País

(…) Most of the homes bought this year cost between €50,000 and €100,000. That has been the most popular price range in the provinces of Madrid, Valencia, Sevilla, Zaragoza, Málaga and the Canary Islands. Homes were more expensive in Barcelona and the Balearic Islands, where they typically cost between €100,000 and €150,000. Those are the findings of Tinsa’s IMIE Local Markets Index for Q4, published yesterday, which concludes that the average price of finished homes (new and second-hand properties) rose by 1% in Spain in 2015.

This data, which represents the first YoY increase since the beginning of 2008, reflects the changing trend in the evolution of prices. Just a year ago, in the last quarter of 2014, the same index reflected a YoY decrease of 4.5%. (…).

During 2015, average prices increased the most in YoY terms in the Catalan provinces of Girona (10.7%), Barcelona (5.8%) and Lleida (5.3%), as well as in Albacete (4.5%) and Madrid (3.3%). In terms of provincial capitals, Barcelona led the ranking with a YoY increase of 8.5%, followed by Badajoz (5.7%), Ávila (4.3%) and Madrid (3.8%). Prices are expected to increase at rates of less than 5% during 2016. Nevertheless, the evolution of the market will be determined by the political panorama in Spain, as well as by the high level of debt that the economy and families still hold, and the quality of new jobs. The creation or otherwise of new solvent demand will be the main driver, to the extent that the pent-up demand, which is currently boosting the market, loses power.

“We should not forget that the market is extremely heterogeneous and is moving at different speeds depending on the area. If we compare average prices in Q4 2015 with those from the same period last year, then average prices have increased in 21 provinces and 15 provincial capitals, but at the same time, they have decreased by more than 5% in nine provinces and ten provincial capitals”, say sources at Tinsa. (…).

How long does it take to sell a property on average? 

On average, it takes 10.2 months to sell a home in Spain, compared with 10.6 months as at June 2015. Cantabria is the province where sales take the longest: 18.6 months. Sales periods significantly above the national average are also reported in the provinces of Álava, Segovia, Ávila, A Coruña, Salamanca and Vizcaya, where it takes more than 14 months on average to sell a home. The provinces where buyers are found most quickly include: Ceuta (3.7 months), Melilla (5.3 months), Soria and Santa Cruz de Tenerife, both with an average of seven months.

Barcelona stands out as the provincial capital that requires the greatest financial effort to buy a home, with 23% of gross annual household incomes being used to finance the first year of mortgages. Meanwhile, Madrid is the major provincial capital with the most liquidity when it comes to selling a home, since it takes less than six months (5.8 months) on average to sell a home, compared with 6.1 months in Barcelona and 13.5 months in Valencia.

Original story: El País (by Sandra López Léton)

Translation: Carmel Drake

INE: House Prices Record Largest Increase Since 2007

11 December 2015 – El País

As the year end approaches, house prices in Spain are showing the most significant signs of recovery since the end of 2007, when the real estate bubble burst and prices began their downwards fall. Property prices increased by 4.5% during the third quarter of the year with respect to the same period in 2014, according to the House Price Index, published on Thursday by Spain’s National Institute for Statistics (INE). In this way, the real estate sector leaves behind the significant price decreases of the last six years and heads into 2016 with six consecutive quarters of increases. Between October and December 2007, which saw the last major increase in the series, prices grew by 5.7%.

Whilst, on average, the increase amounted to 4.5%, the price rises varied slightly by house age. New builds have now stopped increasing – they rose by 4.3% between July and September, i.e. by six tenths less than during the previous quarter – , whereas second-hand homes accelerated their increase, with price rises of 4.5%, i.e. five tenths above the figure recorded in the previous quarter. (…).

Nevertheless, the current situation in the real estate market, still requires prudence. “Although the general price increases that we are seeing across all autonomous communities could lead to euphoria, in reality there are still many parts of Spain where demand continues to be weak and where there are large pockets of homes for which no buyers can be found, and which therefore do not count for the official statistics. We recommend caution and common sense to all our property owners in this situation; they should not get carried away by excessive optimism without first analysing their local market”, advises Fernando Encinar, Head of Research at the portal Idealista.

The technicians at Fotocasa are of the same opinion. “The large discounts on house prices have come to an end, but that does not mean that prices have bottomed out”, says Beatriz Toribio, Head of Research at the real estate portal. In her opinion, there will be fluctuations over the next few months “characteristic of the normalisation that is happening in the sector”. “It will become more apparent that the real estate sector is recovering at two-speeds, depending on the region”, she adds.

Prices in the majority of the autonomous regions increased during the third quarter of 2015, with the Balearic Islands (8.4%), Madrid (6.9%) and Cataluña (6.1%) leading the ranking. By contrast, the smallest increases were seen in La Rioja and Aragón (0.9%) and País Vasco (1%). Fotocasa’s real estate index has been registering continuous YoY price increases for several months in regions such as Cataluña, Madrid and the Balearic Islands.

This recovery in prices is much more apparent in major cities, such as Barcelona and Madrid, where prices have been increasing in almost every neighbourhood for several months. By contrast, in Castilla la Mancha and Extremadura, we are still seeing YoY price decreases of 5%.

Original story: El País (by Sandra López Letón)

Translation: Carmel Drake

Tinsa: House Prices Decreased By 3.67% In February

12 March 2015 – 20 Minutos

House prices have recorded an average cumulative decrease of 42.6% since the end of 2007.

Homes on the Mediterranean Coast have lost more than half their value.

Prices may bottom out in the next few months.

In areas with low demand and significant stock, further price decreases are expected.

A change in the real estate cycle has begun; but since it is a cycle, the changes will not happen overnight. In this way, although prices are now rising in some areas of Spain, in many others, they are still declining and those areas are, for the moment, in the majority.

According to data published by Tinsa, house prices fell by 3.67% in February with respect to the same month in 2014. On the Mediterranean Coast, homes have lost more than half of their value due to the crisis, but prices may bottom out in the next few months.

With respect to the peak prices recorded at the end of 2007, house prices have recorded a cumulative decrease of 42.6%, according to the index prepared by Tinsa. On the Mediterranean Coast, the decrease has been much more pronounced, according to the appraisal company, which highlights that in this region, the cumulative decrease during the crisis has amounted to 51.1%.

In February, house prices decreased by 4.9% and 4.4%, respectively, in large cities and metropolitan areas. Since the peak of the cycle, capitals and large cities have recorded a cumulative decrease of 46.5%, whilst metropolitan areas have experienced a cumulative reduction of 45.5%.

By contrast, the Balearic Islands and Canary Islands recorded a year-on-year increase of 0.7% (in Feburary), whilst on the Mediterranean Coast, the decrease was 4.7%. From the peak levels recorded before the crisis, house prices on the islands have decreased by 32.4%.

In the towns included within “other municipalities”, the decrease in February with respect to the same month in 2014 was 2.1% and since the peak, was 36.1%.

Optimistic forecasts?

Tinsa notes that average house prices began a stabilisation process in 2013, characterised by a moderation in the rate of decline in average prices. “If the optimistic forecasts that various official bodies are predicting for economic growth and employment are fulfilled, then average prices in Spain may bottom out in the next few months”, says the company.

However, it warns that this forecast does not exclude the fact that in localised markets, where demand is particularly weak and there are significant levels of stock, (downwards) adjustments are still expected and there may yet be significant year-on-year decreases.

Original story: 20 Minutos

Translation: Carmel Drake

Tecnocasa: Average Rents Reached €8.54/sqm In 2014

19 February 2015 – El Mundo

Rental prices (in 2014) were slightly higher (+0.47%) than at the end of 2013.

The market is suffering its greatest declines in Madrid (-1.57%) and Barcelona (-0.59%).

The typical landlord profile: pensioners (28%), Spanish nationals (96%) and married (70%).

The typical tenant profile: single people, with permanent employment contracts, aged between 25 and 44 years old and Spanish.

The Tecnocasa Group has presented its first report about the residential rental market in Spain (a groundbreaking study). Highlights show that the average cost of rental homes amounted to €8.54/square metre (in 2014), which is slightly higher (+0.47%) than at the end of 2013.

With these figures on the table, Tecnocasa says that “rental prices have remained stable (upwards)”, although it acknowledges that there has been a slight decline in the two largest Spanish cities. Specifically, rents became 1.57% cheaper in Madrid and 0.59% cheaper in Barcelona, where prices amount to €10/sqm in absolute terms.

One must go back to 2007 to find the last report about rental prices nationwide. The then Housing Minister, María Antonio Trujillo, presented the OEVA (the State Observatory for Rental Housing or ‘Observatorio Estatal de la Vivienda en Alquiler’), which was the first official survey about the market. It was also the last. That study reported that the average price of rental housing was €7.20/square metre.

Tecnocasa’s study shows that the profile of landlords, i.e. of the people that lease out their properties, includes a high percentage of pensioners (28%), Spanish nationals (96%) and married people (70%). In terms of the profile of tenants, they are single, with permanent employment contracts, aged between 25 and 44 and, for the most part, are Spanish.

Lázaro Cubero, Director of the Department for Analysis and Reports (Departamento de Análisis e Informes or DAI) at the Tecnocasa Group, notes that rental prices have decreased by less than purchase prices in the last year, which means that “the yield a landlord can obtain by renting out a home that he/she owns is now greater”. Specifically, this yield has increased to 7.41% on average for the whole of Spain.

These figures represent the findings of the first report about the rental market conducted by the Tecnocasa Group and the Univerisdad Pompeu Fabra (UPF), based on a study that analyses data extracted from the property rental agreements brokered by Tecnocasa’s network (of agents) in Spain between 2012 and 2014.

Original story: El Mundo

Translation: Carmel Drake

The Gap In House Prices By City: Falls Of 10% And Rises Of 3% In 2014

27 January 2015 – Expansión

House prices are evolving at different rates, depending on the region or city that you look at. Whilst in 2014, seven provinces and eight capitals recorded decreases of more than 10%, others experienced increases of close to 3%, according to Tinsa’s IMIE Local Market Index.

Overall, prices declined by 4.5% during the last quarter of 2014, compared with a year-on-year decrease of 4.3% in the third quarter and the fall of 8.3% from a year earlier.

“Although average house prices in Spain began to stabilise a little over a year ago and there has been progressive moderation of year-on-year decreases, the statistics show that some areas have started this stabilisation process more slowly and are still experiencing significant decreases”, says the document.

The gap that exists between cities is very noticeable. For example, whilst in Malaga, prices increased by 4.7% during the fourth quarter with respect to the previous year, house prices in the city of Ávila recorded a year-on-year decrease of 11.7%. “Another seven capitals recorded decreases of more than 10% in 2014. Namely, Huelva and Bilbao (both with a decrease of 11.1%), Almería and Badajoz (both with declines of 10.8%), Córdoba (-10.6%), Oviedo* (-10.4%) and Vitoria (-10%)”, adds the document published by the valuation company Tinsa.

By city, the most notable increases were in: Melilla (+2.3%), Palencia (+1.3%), Palma de Mallorca (+0.5%) and Barcelona (+0.2%). Meanwhile, prices stabilised in Burgos (0.0%). Three capitals recorded decreases of less than 2%: León (-0.5%), Murcia (-1%) and Vigo (-1.7%).

Looking back, Ávila is the capital that has experienced the greatest cumulative decrease in prices since 2007, at 56.1%, followed by Zaragoza and Guadalajara capital, where the decline during the crisis years reached 55.1% and 55%, respectively.

By province, the behaviour of prices in Navarra (-14.1%), Lérida (-14%) and Cuenca (-12.7%) contrasts with the increases in Palencia (+3%), Teruel (+2.8%) and Melilla (+2.3%).

In terms of the data by autonomous region, only two regions have experienced notable price increases: Melilla and the Balearic Islands (by 2.3% and 1.5%, respectively). On the other hand, decreases were recorded in Navarra (-14.1%), Asturias (-9.4%), the Canary Islands, Castilla y Leon and Valencia (all -6.8%) and Murcia (-6.5%).

*Provisional data

Original story: Expansión (by M. G. Mayo)

Translation: Carmel Drake

Housing: Rental Prices Increase By 2.6% In 2014

21 January 2015 – El País

Barcelona is the most expensive regional capital in Spain and Lugo is the most economical.

House rental prices in Spain closed the year (2014) with a slight increase of 2.6%, to reach €7 per square metre per month. During the last quarter of the year, prices continued to rise, up by 0.2%.

“The data shows a stable outlook for the rental market, which although is now recovering, is not showing any signs of a sudden increase in prices. In any case, as with the market for house sales, we have to recognise that the rental market has two speeds. Thus, the increases recorded in markets such as Madrid, Barcelona, tourist areas and specific areas of the País Vasco have sparked interest from investors towards these regions, however this has been at the detriment of other less profitable areas”, says Fernando Encinar of idealista.com.

By autonomous region, the greatest increase was recorded in Cataluña, where landlords are now charging 9.8% more to let their properties than a year ago. It is followed by the regions of Extremadura (3.9%) and the Balearic Islands (2.4%).

By contrast, Murcia and Galicia have experienced price reductions of around 4% and 3%, respectively.

Madrid continues to be the most expensive autonomous region, at €10.20 per square metre. It is followed closely by the País Vasco (€10.00/m2) and Cataluña (€9.20/m2).

Barcelona consolidated its position as the most expensive regional capital in Spain, with an average price increase of 11% to take it to €12.50 per square metre; it is followed by San Sebastián (€11.80/m2) and Madrid (€11.40/m2). At the opposite end of the table, we find Ourense and Lugo, as the cheapest regional capitals, with an average price of around €4.10/m2 in both cities.

Notably, Jaén was the regional capital that saw the highest increase in rental prices in 2014, which grew by 10.4%.

Original story: El País (by Paula Cossío)

Translation: Carmel Drake