Madrid and Barcelona have been in recent years two of the Spanish cities where the price of rental housing has become more expensive.
Experts had been warning for months that both markets were beginning to peak, since in some districts prices were even above the maximums reached before the 2008 crisis.
The arrival of the pandemic has meant a drastic brake on the price trend in these municipalities, increasing the symptoms of a slowdown that began to register before Covid-19. Thus, the double-digit increases that were registered months ago, both in the capital and in Barcelona, have now given way to falls close to 10% in some of its districts, according to the July data that Fotocasa manages.
This drop in prices is mainly due, according to experts, to the increase in supply that has occurred during the months of the pandemic. The period of confinement almost completely paralyzed the activity in the sector, for which a significant part of the supply accumulated for two months.
In addition, the drop in tourism has meant that between March and mid-July around 20% of the supply of tourist rental homes goes to the traditional marketAccording to the data managed by Pisos.com, which has meant a significant injection of assets in some specific neighborhoods, which, in any case, could be temporary, since once the tourism market recovers, they could return to their origin .
The offer would also have increased throughout these months due to a transfer of the sale market, since some owners who have no urgency to sell and who have seen how their price expectations could not be reached at this time, have decided to pass housing to the rental market. In this sense, from Century21 they emphasize that after the release from confinement, the sale and purchase operations that have been closed in the second-hand market have been made with average discounts of 10%.
Slight drop in demand
This one-off increase in supply is compounded by somewhat weakened demand and impacted by the crisis and the uncertainty of the current health and economic situation. Thus, according to Fotocasa data, before the pandemic, 14% of individuals between 18 and 65 years of age were looking for housing in the rental market, a percentage that has dropped one percentage point after the pandemic to 13%. In sales the decrease is greater, two percentage points, so it goes from 15% to 13%.
Despite this drop in demand, the portal’s report highlights that the rental market has gained ground compared to the purchase. Thus, if before the pandemic 34% of people active in the real estate market were looking for housing to rent, now this percentage has risen to 39% and is equal to the percentage of active Spaniards in the real estate market who are looking for a house to buy . Furthermore, 22% of the assets are currently searching in both markets.
Impact on Barcelona
Barcelona, which, as experts point out, leads the way in the trend that the housing market will take in Spain, is the one that registers the most pronounced year-on-year falls. In addition, the rental price decreases in its monthly variation in all districts.
Horta – Guinardó is the one that has registered the greatest decrease in the month of July, both year-on-year and monthly. In the first case the drop was 9.2% and in the second 5.1%, according to the data collected by Fotocasa.
Les Corts, Eixample and Ciutat Vella complete the podium, since in the first case the year-on-year reduction in rent has been 8.9%, while in the other two districts they share third place with a drop of 8.8%.
In the case of monthly declines, behind Horta-Guinardó are Gràcia (-4%), Les Corts (-3.7%), Eixample (-3.3%), Sant Andreu (-2.9%) ), Sants- Montjuïc (-2.1%), Sant Martí (-1.6%), Sarrià – Sant Gervasi (-1.5%), Ciutat Vella (-1.1%) and Nou Barris (-0 , 7%).
Regarding the price per square meter, the Ciutat Vella district is the most expensive with 18.04 euros per m2 per month and the cheapest is Nou Barris with 13.38 euros.
In the case of Madrid, the rental price drops in 16 of the 19 districts with monthly variation. The district with the greatest decrease compared to June is Puente de Vallecas (-3.4%), followed by Chamartín (-2.8%), Centro (-2.4%) and Barajas (-2.1% ). The district with the highest monthly increase is Arganzuela with a rise of 0.6% (see graph).
The year-on-year decreases are, as in Barcelona, more pronounced. Thus, Usera registers the largest fall, of 7.8%, followed by Puente de Vallecas, with a decrease of 6.7%, and the Centro district, where prices fell 5.5% in July compared to the same month of the year past.
They are still above average
Despite these drops, the 19 districts of Madrid have a price above 10 euros per m2 per month, so they are still quite a distance from the average rental price in Spain, which according to Fotocasa is at the end of July at 10.73 euros. In this way, the cheapest districts of Madrid would still be 9% above this national average and would be Usera, where the square meter is paid at 11.8 euros, and Villa de Vallecas (11.92 euros per m2).
On the opposite side is Salamanca, which is the most expensive district to rent in Madrid, with a price of 18.63 euros, which is 73% above the Spanish average. It is followed closely by Centro, with a price of 18.18 euros per m2 per month and Chamberí with 18.05 euros.
In Barcelona the distances with the average price are even greater, since in the case of Barcelona, the lowest price is higher than in Madrid and stands at 13.38 euros. This is the case of Nou Barris, where the square meter is paid 24.6% above the country’s average. The highest difference with respect to the average in Barcelona occurs in Ciutat Vella, and is 68%.
With these prices, Madrid and Barcelona are behind Ibiza as the municipalities with the highest average price per m2. Thus, Ibiza is at 18.02 euros, while Barcelona reaches 16.78 euros, and Madrid 16.31 euros. This means that in Barcelona the rent is paid on average 58.38% more expensive than the national average and in Madrid 52%.
According to Fotocasa, the average price of rental housing in Spain fell in July by 0.8% in its monthly variation, although, in the year-on-year growth of 7.9%.
This increase compared to last year has been deflating since April, when prices rose 10.9%. In May the increase was lower, 9.8% and in June 9.1%. Likewise, since May the rent began to register monthly price drops with a decrease of 1.09% (see graph) and with the fall in July, which was the same as in June, they have already been cheaper for three consecutive months of the house.
According to Anaïs López, Fotocasa’s Communication Director, this year-on-year rise in average prices in Spain “is due to the high demand for rental housing and the scarce supply or supply that is not adapted to the needs of the demand. supply and demand are not more balanced, we will continue to register increases in the rental price. “
The most expensive regions
According to data from the real estate portal in Spain, nine autonomous communities present negative monthly data in July. Castilla-La Mancha, with a decrease of 2.6%, is the region with the lowest price, followed by Madrid (-1.9%), Catalonia (1.6%), Navarra (-1.2%), Castilla y León (-0.7%), Andalusia (-0.6%), Aragon (-0.5%), Balearic Islands (-0.4%) and Comunitat Valenciana (-0.3%).
On the other hand, the price of housing increased in the communities of Extremadura (4.2%), Cantabria (3.2%), Asturias (1.8%), La Rioja (1.2%), Region of Murcia (0.7%) and the Canary Islands (0.2%). Galicia (0.0%) and the Basque Country (0.0%) remain without any monthly variation.
Regarding the ranking of Autonomous Communities with the most expensive home prices to rent a home in Spain, in the first places are Madrid and Catalonia, with prices of 15.01 euros per m2 per month and 14.40 euros per m2 per month, respectively. They are followed by the Basque Country with € 13.21, the Balearic Islands with € 12.50, Navarra with € 9.76, the Canary Islands with € 9.63 and Cantabria (€ 9.12).
By provinces, the rental price decreased in 26 (53%) of the 49 provinces analyzed by Fotocasa. The most pronounced monthly decrease is recorded by Cuenca with a drop of 6.7%. They are followed by Palencia (-6.5%), Toledo (-5.3%), Albacete (-2.9%), Barcelona (-2%), Madrid (-1.9%), Jaén (-1 , 8%), Seville (-1.5%), Malaga (-1.3%) and Guadalajara (-1.2%). On the other hand, the provinces with the highest increase are: Huelva (8.2%), Ourense (4.8%), Badajoz (4.3%) and Cantabria (3.2%).