Real estate in Spain: The average rental costs in Spain are falling for the first time since the economic and business financial crisis

0


[ad_1]

The decline in rental prices is no longer a big city phenomenon in Spain. For the first time in years, average rental costs in the country are either falling or stagnating. In January of this year, the coronavirus pandemic ended a growth phase that had been uninterrupted since July 2015 according to the property website Fotocasa and since June 2014 according to the property website Idealista. It is the first drop since the financial crisis in Spain in 2008-2014. In the big cities, rents keep falling.

Real estate portals Fotocasa, Idealista and Pisos.com saw rental costs decline in major Spanish cities in the early stages of the pandemic. Rent became cheaper with each passing month, which was reflected in the national average. However, year-over-year rental costs in a given month were still higher than in the same month last year. Now, in 2021, this is no longer the case: the Spanish average of € 11 per square meter, which Idealista recorded as an offer price last January, is 0.1% below the figure 12 months earlier. It’s not a huge drop, but it’s significant as this is the first time since June 2014, according to Idealista.

A recent study found that the number of properties available for rent in Spain increased by 178% over the past year.

The data provided by the portals Fotocasa and Pisos.com reflect the same trend. According to Fotocasa, average rental costs stagnated (0%) in January after growing continuously for 65 months. The most dramatic drop in prices was recorded by Pisos.com – a 1.8% year-over-year drop, despite a slight 0.1% drop as early as November.

The January data represents a turning point for all three portals, as the average rental costs up to 2020 were higher in December than at the beginning of the year, despite the pandemic. However, it should also be taken into account that the websites indicate the price requested and not the price at which the contract is being entered into. As Gonzalo Bernardos, director of the Real Estate Masters course at the University of Barcelona, ​​points out, these prices “reflect upward trends more accurately than downward trends”. He believes real prices may have started falling months ago.

According to Bernardos, one of the reasons for the drop in prices is excess supply. A recent study by Casafari, a portal with a large property index for professionals and companies, found that the number of properties available for rent in Spain rose by 178% over the past year. The report’s authors point out that this is mainly due to the number of tourist apartments that have been placed in the traditional rental market. Due to coronavirus travel restrictions, the number of tourists to Spain dropped dramatically last year, meaning there was less demand for vacation rentals.

In addition, many families have economic difficulties. “If you suddenly find yourself in an ERTE vacation program, you have to pay less,” says Lázaro Cubero, director of analysis at the real estate company Tecnocasa Group. “A lot of people left the property they rented for something cheaper and during the initial lockdown we saw a shift in a number of cities as a result.”

There are also people looking for larger homes to accommodate their remote working needs. “Some people want to pay the same price but more space,” says Cubero. Both experts believe these factors are in line with the changes the portals reported, with prices falling first in the big cities, where more tourists, business travelers, and students live.

Significant drops

Bernardos points out that as a result, rental costs in smaller cities will not decrease as much. “In the average regional capital, the discrepancy is between [the cheapest and most expensive] The rents may be 30%, but in Barcelona or Madrid there is a 200% difference between the most expensive and the cheapest areas, ”he says. In other words, rental costs in Madrid and Barcelona must continue to fall because the cities “have the largest surplus of rental properties since the advent of democracy”.

Data from the real estate portals in January shows that the main drop in prices is concentrated in cities with more than half a million inhabitants. In Barcelona, ​​all three sites are seeing double-digit decreases in rental costs compared to 12 months ago. In Madrid, where rents have also fallen month by month since mid-2020, rental costs are already 8.6% below the previous year’s figure, according to Idealista, the portal with the lowest decline. The biggest drop was in the southern city of Seville, where rental costs fell 14.78%, according to Pisos.com.

All data point to significantly lower prices, a phenomenon that even the capital of Aragon, Zaragoza, is experiencing. Compared to December, prices fell in all major cities, with the exception of Valencia, according to Fotocasa, which saw a slight monthly increase of 0.1%, although rental costs are still 7.4% cheaper according to the previous year same numbers. Zaragoza and Valencia are not only the cities with the lowest declines, but according to all three portals also the cities with the cheapest average rents.

Some people want to pay the same price but more space

Lázaro Cubero, Director of Analysis at Tecnocasa Group

The fact that declines continue to accelerate in major cities shows that experts say there is still some work to be done before prices bottom out. “The economic problems will not be resolved this year,” emphasizes Cubero. “Hopefully the health problem will be resolved and logically this would mean that the downward trend will continue. The opposite is very unlikely to happen, but from then on the decline will slow down if all goes well. “

Cubero also points out that the rebound in the rental market will be reflected before the sales market, as it did in the real estate market at the start of the coronavirus crisis. “Renting is more agile and these trends are visible earlier,” he explains. “If a tenant decides they want to move, they will do so in two months.”

Meanwhile, Bernardos points out that there are several signs of the rental market picking up. “First-time landlords will find that they can rent their properties faster, and the next step will be prices going up,” he says, but adds that there will likely be lower prices for some time. “In 2022 the price will continue to fall as the surplus has yet to be absorbed,” he says. “We saw the market go down because of the oversupply, which is a novelty, and then prices will rise, but much more slowly.”

English version of Heather Galloway.

[ad_2]

Share.

Comments are closed.