The number of major cities where paying a mortgage requires more capital than paying monthly rent increased last year: in nine of the 63 largest Spanish citiesWith a population of more than 100,000 by the end of 2023 Monthly payment on a home loan is more expensive than rent. There were a total of six towns that met this condition in 2022: San Sebastián, Alcobendas, Palma de Mallorca, Marbella, La Coruña and Pamplona were already on this list; whereas now Cádiz, Bilbao and Madrid uniteAccording to the latest research published by appraiser UVE Valaciones.
“The fact that installments are higher than rents does not mean that renting is better than buying in the long run. In our calculations, only in San Sebastián rental is clearly preferable to purchase even in the long term; “The balance between buying and renting is achieved when loan payments are approximately 35% higher than rents,” says Germán Pérez Barrio, head of the appraiser who wrote the research. Any insurance, community neighbors or taxes that the rental does not include, or even electricity, gas or water consumption in some cases, are taken into account.
However, while renting in the Basque City may be more interesting from a purely financial perspective, the change in monetary policy and its impact on the Euribor and mortgages means that renting is now more affordable than it was a year ago. According to UVE Valaciones research, by the end of 2022, There were 40 cities where mortgage payments accounted for more than 75% of average rent. There are now 44 municipalities70% of the 63 have a population of more than 100,000.
Cities where rent is lower than mortgage
Here are twelve cities where buying a home with a mortgage is better than renting, since the average mortgage doesn’t even cover the rent. About shine, Kordova, algeciras, Murcia, Reus, Badalona, L’Hospitalet de Llobregat, on the wire, Alicante, lleida, Saint Coloma de Gramenet anyone Tarragona. In these places, the monthly cost is about the same if we take into account the expenses of owning an apartment; Beyond the savings that owning property provides in terms of wealth creation, this is why it is the most interesting option.
For example, for rent at L’Hospitalet de Llobregat The monthly cost of an 80 square meter house is almost 1,300 euros.Meanwhile Mortgage payment on a loan will be 820 eurosConsidering that with a term of 24.5 years and interest of 4.27% (the latest data published by the Spanish Mortgage Association) it is 80% of the value of the house, plus the expenses that this entails.
“While the comparison between mortgage payments and rents is positive for home buying, we must remember that main obstacle For first time buyers You should have saved the equivalent of 28-32% of the purchase price The part of the home that is not financed by financial institutions (20%) and taxes and expenses associated with the purchase (8%-12%). This is the main obstacle for young people and the reason why alternative measures for rent regulation are advocated, based on the facilitation of purchase through State guarantees that allow financing of more than 80% of the purchase price,” concludes the chairman of SVU Ratings.