Average rent in Spain has increased exponentially in recent years, not just in major cities. Generally, Between 2015-2022, the rent that the tenant has to pay every month has increased by approximately 60%, Based on data collected by the Brainsre real estate data platform.
This rapid increase is not related to the wages of Spaniards, shot percentage of income that goes out to pay the rent. In the Balearic Islands, a region highly affected by tourism, the average net income per household according to the INE is 29,368 euros; The average rent is 23,400 Euros per year. The same thing happens in Catalonia, where the average income is 34,982 euros and the average annual rent is 16,644 euros, despite market intervention. In the capital, this phenomenon is repeated, with an average rent of 16,476 euros and income of 37,687 euros.
According to what experts consider ‘healthy’, the rent threshold is between 30-35%, ie allocates this percentage of household income to payments for rented or owned housing. This ratio has been exceeded in eight regions in addition to Madrid, Catalonia and the Balearic Islands: Andalusia with 51.23%; Canary Islands, 38.69%; Cantabria, 36.89%; Valencian Community, 43.26%; and the Basque Country with 35.2%. Areas below 30% where at least a percentage of the salary goes to rent, Ceuta, Melilla, Aragon, Asturias, Castilla y León, Castilla La-Mancha, Extremadura, Navarra and La Rioja.
According to the report Residential Property Telescope Mutual funds and large landlords in Spain are the cheapest to rent their homes, according to consulting firm EY. 7% to 20% below market price of domains.
Spanish manager Azora has been criticized for purchasing social housing from the Community of Madrid during the previous financial crisis, Rent with an average of 30% discount regarding the market. Resydenza, the platform for one of Spain’s 50 largest fortunes, keeps homes 21% lower than its peers, or Realia, owned by Mexican billionaire Carlos Slim, does it at a 10% discount. All these houses are in areas of great famine such as Madrid, Barcelona, Malaga and Valencia.
Javier García-Mateo, Real Estate partner in EY Strategy and Transactions, ensures: “Institutional investors are those who favor housing access for the lower classes”.
Despite the importance of big forks, their role in the Spanish rental market is negligible. Total 95% of the housing stock in this market is less than individuals., increasing their annuities to get higher profits. For now, demand supports these price increases, which are sustained due to supply shortages.
paralyzed housing law
this The Housing Act, one of the main promises of the coalition government led by Pedro Sánchez, has been paralyzed in Congress for four months, despite being seen as a priority. Negotiation will be difficult because the executive’s legislative partners are demanding guarantees that regional powers will be respected, as promised by Transport and Housing Minister Raquel Sánchez.
This issue also brought up a critical report from the General Judicial Council (CGPJ) in which it asked the rules for intervention in rents to be determined. It is added that they have declared that the communities governed by the PP will not enforce the norm.
“Intrusive measures such as price controls only create legal distrust and reduce the current offer, which is ineffective in solving the problem of access to housing,” he told this newspaper. Joan ClosPresident of the Rental Owners Association and former mayor of Barcelona.
The manager has so far acted indirectly, by prohibiting the update of rent above 2% in the housing market by separating it from the Consumer Price Index (CPI) until 31 December.
Possible solutions
Spain needs between 1.5 and 2 million new homes for rent to meet current demand, according to a report by consulting firm Colliers. Considering that approximately 110,000 new jobs are started each year, it will take 15 years to meet the rental demand. The required budget will require an investment of 250,000 million Euros, which is more than the annual expenditure of the State on pensions, which is estimated to be less than 200,000 million.
On average, flat owners Annual return between 2.5% and 5.5%A very modest return compared to what can be achieved on other investments, such as the stock market or other real estate assets. Despite the low profitability, it is one of the safest and most durable bets in times of crisis. However, the funds will not encourage more affordable rental housing if the yield does not reach a minimum, no matter how much interest.
Some Administrations have opted for public-private formulas to encourage the construction of new flats. Catalonia, Community of Madrid or Madrid City Council offered funding Build affordable rental housing on public land for 40 or 70 years of rental income. The Vive Madrid Plan has already begun procedures for the construction of 7,783 units of the 25,000 it hopes to have in eight years.
Joan Clos urges Public Administrations to “establish a stable and enduring regulatory framework that provides legal certainty to owners and investors over the long term.” In his view, it is also important to “make a firm commitment to public-private cooperation, as other European countries have done successfully”.