One year after the introduction of the Catalan rent cap law limiting rental prices in the region (known in Spain as "la ley catalana del alquiler"), the data show that the measure has had two main consequences: 1. almost zero impact on price reductions, with rental prices dropping in a similar way compared to other major markets, and on the other hand, 2. the law has caused a significant reduction in rental supply, according to data from idealista, the leading real estate marketplace in southern Europe.
The law has not had an impact on prices in Barcelona which have fallen in a similar way to those in Madrid
During the year in which price controls have been implemented, Barcelona has recorded a reduction in rental prices of 8.2%, a slightly lower decline than that recorded by Madrid (-9.3%), where prices are freely agreed between parties, according to statistics published by idealista.
Extending the time range to two years, it can be seen that Barcelona has maintained a downward trend that began in 2019, which accelerated during 2020, when prices fell by 12%. In Madrid, on the other hand, the decline has mainly occurred in the last year, with a drop of only 9.9% in the last 24 months, which puts the focus of the fall on the enormous oversupply registered.
In other markets that are also very dynamic but not as strained as Madrid and Barcelona, prices have registered softer falls: -5% in Palma and -1.7% in Seville.
A significant part of rental supply has evaporated in barely a year
However, when we look at the stock, i.e. the amount of properties available for rent on the market, the situation in the Catalan capital is not in line with the rest of the major markets and the rate at which the available supply is being reduced is significantly higher. The number of properties offered for rent on idealista in the city of Barcelona at the beginning of September 2021 (around 10,900) has been reduced by 42% compared to the available stock a year earlier in 2020, when the available product doubled due to the confinement that caused the market to be closed for several months.
When this comparison is made against data from the first week of September 2019, the number of rental properties currently available is only 13% higher than it was then.
The number of available rental properties has fallen in recent months in all the major markets, but nowhere has this reduction reached the levels of the Catalan capital. In the city of Madrid, where the market is the most similar to Barcelona's and which also doubled its supply in 2020, the current stock is 22% lower than a year ago, but is still 62% higher than it was at the close of summer 2019.
In this sense, Palma de Mallorca has 14% less supply than a year ago but 64% more than in 2019; and Seville has 25% less available rentals, but 59% more than 2 years ago.
With prices still with room to rise, the main problem currently facing the Catalan rental market, especially in Barcelona, is the dramatic reduction in available stock. The reduction in supply in Barcelona has caused the pressure of demand to skyrocket, making it increasingly difficult for a family to rent a property in the city. In September 2020, the relative demand index (which idealista compiles by measuring the number of contacts that each rental listing receives on average) stood at 1.7, while during the same week in 2021 it surpassed the 4 barrier, reaching 4.8. This figure is the highest in the historical series carried out by idealista in the city.
According to Francisco Iñareta, spokesperson for idealista, "the data are stark: the Catalan rent cap law has not worked as expected. On the one hand, prices have fallen, but just like they have in other markets. On the other hand, future tenants now have a much smaller market available to them, which will make access to rental housing even more difficult. The way to ensure affordable rent is to expand the housing stock, as we saw in the spring and summer of 2020, when supply grew in such a way that it had an immediate impact on prices in the big cities, which fell sharply".