The price of rented housing in Spain fell by 1.3% during the third quarter of 2018, making the current average price per square metre 10.60 euro per month, which is 0.98 euro per square foot, according to the report on the development of rental prices published by idealista. The interannual rate change, comparing with the third quarter of 2017, is a rise of 12.6%.
For Fernando Encinar, head of research at idealista, "the data confirm that, despite the widespread belief in the existence of a bubble in rental prices, there is no such thing. By definition, it cannot exist in a market such as the rental market, as bubbles only occur when assets (houses, bitcoins, tulips, etc.) are bought at an above-baseline price with the simple expectation of a strong appreciation in the short term. In the rental market, prices have risen due to a mismatch between supply and demand.
“In fact,” he adds, "with the end of the summer we have seen how rental prices have evened out across Spain. If we look at the capitals of the Spanish provinces, rents have fallen in almost half of the markets analysed and grown moderately in the rest. In Barcelona, the spearhead of rental in Spain, prices are already down 5.5% year-on-year. In Madrid, prices rose 7.4% year-on-year, far from the double-digit increases experienced in previous quarters.
The measures aimed at improving the rental situation proposed by the new left-wing Spanish government headed by Pedro Sanchez, such as the promotion of social housing for rent, could reach the market when the problem no longer exists. Building 20,000 council houses for rental purposes will involve the consumption of resources and time that might not have the expected result by the time the first ones start to come on the market in 3-4 years’ time.
The best social policy for rental housing is to encourage empty properties to be put on the market. And the best way to do this is through stable and reliable regulatory, legal and fiscal frameworks that encourage the thousands of owners of these empty houses to rent them out. Coercive policies, as we have seen in Paris and Berlin, do not work.”
Eight of the Autonomous Communities in Spain register higher prices than those they had three months ago. The greatest increase was registered in Galicia, where the average rental price increased by 3.4%. It is followed by increases in Navarre (2.7%), Madrid (2.6%), La Rioja (1.7%) and the Basque Country (1.2%). The biggest fall, on the other hand, occurred in the Balearic Islands, where property owners’ returns been reduced by 9%.
Madrid is the most expensive autonomous community, at 15.30 euro/m2 or 1.42 euro/sq ft to let a property per month. It is followed by Catalonia (14.70 euro/m2 or 1.36 euro/sq ft) and the Balearic Islands (13.50 euro/m2 or 1.25 euro/sq ft). Then comes Euskadi, the Basque Country (11.90 euro/m2 or 1.10 euro/sq ft). At the bottom end of the table are Extremadura (4.20 euro/m2 or 0.39 euro/sq ft), Castile-La Mancha (4.90 euro/m2 or 0.45 euro/sq ft) and La Rioja (5.80 euro/m2 or 0.54 euro/sq ft), which are the cheapest communities.
18 provinces have seen their rental prices increase during the summer. The greatest upturn was recorded in Pontevedra, where prices increased by 9%. Also significant were the increases registered in Valladolid (7.5%), Alicante (3.7%), Toledo (3.5%), Navarra (2.7%), Zamora and Madrid (2.6% in both cases). The greatest fall occurred in Huelva (-11.6%), followed by the Balearic Islands (-9%), Segovia (-5.8%) and Cordoba (-5.7%).
The ranking of the most expensive provinces for property leasing per month is headed by Barcelona (16 euro/m2 or 1.48 euro/sq ft), Madrid (15.30 euro/m2 or 1.42 euro/sq ft) and Guipuzkoa (14.20 euro/m2 or 1.32 euro/sq ft). Jaén is the cheapest province to rent a house, at just 3.90 euro/m2 or 0.36 euro/sq ft per month. It is followed by Caceres (4 euro/m2 or 0.37 euro/sq ft), Zamora and Ávila (4.30 euro/m2 or 0.40 euro/sq ft in both cases).
In Valladolid, property owners have increased the price of their rented properties by 7.4% in the last quarter. In Pontevedra, the increase was 4.5%, while in Seville it was 4.4%. Surprisingly, there was also an increase in the relatively cheap capital of Ávila, where prices were 4.1% higher than they were three months ago. Segovia, on the other hand, marks the biggest fall among the 21 capitals that have seen their prices drop this summer (-5.8%). It is followed by reductions in Murcia (-4.7%) and Salamanca (-4.3%).
Barcelona is the Spanish capital with the most expensive rents (17.30 euro/m2 or 1.60 euro/sq ft), followed by Madrid (16.40 euro/m2 or 1.52 euro/sq ft) and San Sebastian (15.60 euro/m2 or 1.45 euro/sq ft). In the opposite part of the table we find Zamora, the cheapest capital, with a price of 4.30 euro/m2 or 0.40 euro/sq ft, followed by Caceres (4.60 euro/m2 or 0.43 euro/sq ft) and Ciudad Real (4.90 euro/m2 or 0.45 euro/sq ft).
The idealista property price index
idealista is currently the most used property marketplace in Spain for buying, selling and renting. With thousands of properties currently for sale, the research department at idealista has been analysing real estate prices since 2000. With eighteen years of research under its belt, idealista has become the standard source of data for countless analysis teams from banking and financial entities to public institutions.
To put together this property price index, idealista has analysed 65,142 property listings which were advertised on their database in September 2018. To ensure the data is correct, properties which were previously priced outside of the market have not been counted in the analysis, as well as single-family homes because they skewed the results in some areas. The price is not offered for municipalities with fewer than 50 properties, as the sample size is not sufficient. idealista’s property price index is compiled using offer prices per built square metre.