The rate of growth of the price of rented housing softened in Spain in 2018 and ended the year with an increase of 9.3%, leaving the average rental price per square metre at 10.60 euro per month, which is 98 cents per square foot per month. This rate of growth is low compared with the 18% that it grew in 2017. During the final quarter of the last year, the rate of increase has slowed, as prices fell by 0.6%.
Madrid ended 2018 with a year-on-year increase in the price of rented housing of 4.3%, which places the average price per square metre in the capital at 16.20 euro per month (1.50 euro/sq ft per month), but in the last three months of the year prices fell by 1.5%.
Barcelona has seen rental prices fall for the second consecutive year. In 2018 it fell by 1% to 17.30 euro/m2 (1.60 euro/sq ft), after falling another 2.4% in 2017. Even so, it is the highest rent for in a provincial capital city in Spain. In the quarterly calculation, prices remained stable in the last quarter of the year.
For Fernando Encinar, head of research at idealista, "the numbers prove what we have been saying at idealista for ages: there is no rental bubble. And if there has been, the data shows that it is deflating. Prices have risen throughout Spain in 2018 but this growth is already far from those of previous years. Also, the big rental markets, basically Barcelona and Madrid, anticipate the trend of what we will see later in other cities: in Barcelona rental prices have fallen for the second consecutive year and in Madrid they stabilised with a slight annual increase of 4%, although in the last months of 2018 falls were already recorded.
“Faced with a scenario of normalisation and adjustments of rental prices, we consider it very risky to legislate now on a reality that no longer exists and could very seriously harm the growth of the market. There is no statistical data to justify at this time the urgency with which people want to regulate the control of prices, which in fact are already becoming adjusted in the large markets. In the coming months we will see how rental prices stabilise and enter a phase of plateauing or even more falls. In some neighbourhoods there may still be tension in prices but it will be based on a high demand that clashes with a scarcity of supply in those streets. But in general we expect a moderation of prices. Only housing policies that strangle supply and dramatically reduce it could break this trend towards stability.”
All 17 Autonomous Communities in Spain registered prices higher than those they had a year ago, except Extremadura (-0.1%). The greatest increase occurred in La Rioja, where owners asked for 10.5% more for renting their dwellings than a year ago. This was followed by rises in Navarra (9.5%) and Cantabria (8.8%). Catalonia, on the other hand, experienced the smallest increase (1.3%), followed by the Balearic Islands (2.9%), Murcia (4.2%) and Castilla y León (4.9%).
Madrid (with 15.10 euro/m2 or 1.40 euro/sq ft) is the most expensive Spanish Autonomous Community. It is followed by Catalonia (14.60 euro/m2 or 1.36 euro/sq ft), the Balearic Islands (12.90 euro/m2 or 1.20 euro/sq ft) and below it is the Basque country (11.80 euro/m2 or 1.10 euro/sq ft). At the opposite end of the table are Extremadura (4.10 euro/m2 or 0.38 euro/sq ft), Castile-La Mancha (5.10 euro/m2 or 0.47 euro/sq ft) and La Rioja (5.70 euro/m2 or 0.53 euro/sq ft), which are the cheapest communities.
Only 4 of the 50 provinces in Spain saw their prices fall in 2018. The greatest decrease was recorded in Tarragona, where prices fell by 2.7%, followed by falls in Badajoz (-2.2%), Ciudad Real (-0.9%) and Barcelona (-0.2%). The greatest increase, on the other hand, occurred in Santa Cruz de Tenerife (14.5%), Burgos (13.7%) and Toledo (13.7%).
The ranking of the most expensive provinces was headed by Barcelona (15.80 euro/m2 per month or 1.47 euro/sq ft), Madrid (15.10 euro/m2 or 1.40 euro/sq ft), Gipuzkoa (13.90 euro/m2 or 1.29 euro/sq ft) and the Balearic Islands (12.90 euro/m2 or 1.20 euro/sq ft). Jaén (3.90 euro/m2 or 0.36 euro/sq ft) and Cáceres (4 euro/m2 or 0.37 euro/sq ft) are the cheapest provinces, followed by Ávila and Badajoz (both 4.20 euro/m2 or 0.39 euro/sq ft).
Barcelona is one of the 5 capitals that saw price reduction over the last 12 months (-1%). The others are Castellón (-6.8%), Tarragona (-5.3%), Jaén (-3.1%) and Ciudad Real (-0.1%).
In all the other capitals, rental prices are more expensive today than they were 12 months ago. Burgos is the capital in which the price of rent grew the most during 2018. An increase of 12.7% in the cost of renting a home there has placed its price at 7.10 euro/m2 per month, which is 0.66 euro/sq ft per month. There has also been a considerable increase in Guadalajara, where they have risen by 10.4%, followed by A Coruña (9.6%) and Lugo (9.5%). In Madrid, the increase has relaxed this year, staying at a cool 4.3%.
Despite the decline, Barcelona has consolidated its place as the most expensive Spanish capital (17.30 euro/m2 or 1.60 euro/sq ft), followed by Madrid (16.20 euro/m2 or 1.50 euro/sq ft) and San Sebastian (15.30 euro/m2 or 1.42 euro/sq ft). At the bottom of the table are Cáceres (4.70 euro/m2 or 0.44 euro/sq ft), Jaén (4.80 euro/m2 or 0.45 euro/sq ft) and Zamora (4.90 euro/m2 or 0.45 euro/sq ft), the cheapest capitals.
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 63,545 property listings which were advertised on their database in December 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.