House prices have risen during 2023 and experts predict they will not slow down this year either. Although hikes may be less significant, what will happen to rent in Spain? We look at what will drive supply and demand and keep prices stable.
We must consider the economic and political changes in each autonomous community. After limiting rent increases and approving the Housing Act, 2024 has led to tax relief for small homeowners who rent out their homes. However, Comprarcasa questions this measure's positive effect: "Of the 2.9 million households that reported having a second home, according to INE data in 2021, several studies on the subject confirmed that many of these residences are located in rural areas of people who live in cities but remain linked to their origins through this property," says its CEO, Lorena Zenklussen.
How rent will behave in 2024
Miguel Ángel Gómez Huecas, president of the employers' associations FADEI and AMADEI, comments that prices are likely to rise in areas with less supply, "as there is increasing concern by small savers when it comes to putting their properties on the rental market".
Meanwhile, the real estate personal shopper Iñaki Unsain, and general manager of ACV Gestión Inmobiliaria, predicts that rent in cities will continue to rise, particularly in those regions where rental price limits approved in the last Housing Act will begin to be applied, which we will gradually start seeing this year. "In the case of Catalonia, where 140 municipalities will begin to apply these caps in tense areas in February and especially in Barcelona, prices will continue to rise given the regulation".
Rent could be higher in some areas, "especially in the main cities and tourist areas, e.g., in Barcelona, rent could rise by up to 4%, while in Madrid it could reach 5%. In tourist areas, such as the Costa del Sol or the Balearic Islands, rent increases could be even more, by up to 6% or even 7%," explains Germán Rabellino, CMO of Wolo.
However, such hikes will translate into higher returns for landlords. Germán Rabellino points out that "the profitability for renting a property in Spain will reach between 2% and 5% by the end of 2024, which means an increase of between 4% and 8% compared to 2023".
Low supply and high demand
Real estate in Spain has recently been characterised by low supply and high demand for housing, especially in large cities, on the outskirts of cities, the coast and islands. For this reason, FADEI and AMADEI believe that supply will be minimal due to the legal uncertainty that the Housing Act has caused for landlords. "Meanwhile, demand will increase given difficulties in buying, as interest rates and inflation are still high".
Unsain thinks that renting will probably suffer, and we will see a massive transfer to temporary contract housing, increasing prices significantly and drastically reducing the supply of flats for regular housing. "Despite this, I believe that demand will continue to remain very strong in Barcelona, and given the low supply due to the implementation of these caps, prices will tend to rise".
The areas most in demand for rentals in 2024
The real estate personal shopper highlighted that areas with a wide rental offer have considerably reduced. "The most important rental areas will continue to be prime and central areas that offer tenants the best living conditions". He highlighted the key neighbourhoods in certain cities, such as the city centre or where the lowest prices are now to be found.
Meanwhile, Miguel Ángel Gómez Huecas stressed that the most sought-after areas for renting are those with the best services and, above all, with the most employment opportunities. "These areas are where people want to live, and this will continue to be the case in 2024.