The state of the rental market shows two markedly different Spains. According to research by idealista, rental prices in 11 Spanish provincial capitals are more than they were at the height of the property boom, with Madrid, Barcelona, Malaga and the islands increasing more than 10%. In contrast, 35 capitals are far from the boom levels. Zaragoza, Guadalajara, Cadiz and Santander are the cities furthest from the levels of rent which existed before the crisis.
The city which has seen the biggest increase in rental prices since the pinnacle of 10 years ago was Las Palmas de Gran Canaria – at the time of writing, prices are 31.4% higher than they were back then. This is followed by Santa Cruz de Tenerife (24%), Palma de Mallorca (19%), Malaga (15.7%), Barcelona (15.7%), Girona (14.9%) and Madrid (12.5%). With an increase of less than 10% since then are the cities of San Sebastian (8.5%), Pontevedra (1.3%), Segovia (1%) and Alicante (0.9%).
In all the other capitals analysed by idealista (in 35 of the 46 cities), rental prices remained below the level they reached between 2007 and 2008. In Granada, they are 0.9% under that máximum while in Valladolid they are 2.1% cheaper. They are followed by Cordoba (-3%), Ourense (-3.1%), Tarragona (-3.2%) and Salamanca (-5.1%).
The city in which the difference from the peak of the property bubble is biggest is Zaragoza (-36.7%), followed by Guadalajara (-27.3%), Cadiz (-27.1%), Albacete (-20.9%), Santander (-20.4%), Castellón (-19.7%) and Lleida (-18.5% in both cases). Other cities with a difference of more than 15 percent were Toledo (-17.5%), Ávila (-17%), Logroño (-16.7%) and Ciudad Real (-15.7%).
For Fernando Encinar, Head of Research at idealista, “the rental market is suffering tensions in some areas, but the majority of the country still remains far from the level of prices registered during the property bubble. This polarisation of the market is driven by the two-speed recovery of the property market and by a larger economic drive in the tourism sector which is capable of generating more employment than in other areas.
“The economic recovery is a reality and more and more people are wanting to live in a property to rent, while the risk criteria to get a mortgage are still very strict and a lot of savings are needed, which not everyone can do. In this situation, the demand for rentals keeps growing at a faster rate than the supply, despite the fact that it’s already one of the highest in Europe.
“At idealista, we see it as very positive that rental prices start to be on the radar of both the media and the Administration, something unthinkable just a decade ago. We are betting on the growing emergence of more properties to rent financially stimulating the owners, doing away with obstacles to construction of new properties and transforming the culture of protected properties for sale in this new culture of renting.
“In the same way, we are convinced that it’s possible to establish mechanisms to help finance those people who could make monthly mortgage payments but don’t have the necessary savings.”