RESIDENTIAL properties under construction in Spain being abandoned at half-mast were a common sight during the worst years of the financial crisis, but more are being finished off now than ever since the housing market...
Rental prices shoot up in Spain's most 'touristy' cities
RENTAL properties have been described as 'the new golden egg' with prices rising between 10% and 20% in major cities such as Valencia, Palma de Mallorca, Madrid, Barcelona and San Sebastián in the last year.
Part of this is because of a new surge in tourism apartments – in fact, in Barcelona, it is harder to find a hotel room for a short break than to rent an apartment, which often works out cheaper even for small groups.
And young adults seeking to leave the parental nest are still struggling to get onto the house-buying ladder – not because prices are too high, but because mortgage lenders expect at least a 20% and often a 40% deposit, plus fees on top of this are in region of 12.5% of the market value.
This means Spaniards in their 20s and early 30s are more inclined to rent than buy, which translates to an increasing market and higher demand for property owners seeking to earn an income from their investment.
Rising demand and rental prices, combined with a short-term view that tourist lets for a few weeks of the year earn more than permanent tenants, mean city councils are keeping a close eye on the industry to ensure ethics are not compromised by desire for profit – in fact, the mayoresses of Barcelona and Madrid, Ada Colau and Manuela Carmena respectively, are putting measures in place to stop landlords from throwing out long-term year-round tenants so they can let their properties to holidaymakers.
On the plus side, tenants' worries about being priced out of the market mean anyone able to take a cut in rent received – either because they have no mortgage, or only a small loan needing to be covered – is likely to attract very loyal, long-term tenants who will look after their home extremely well; great peace of mind and security for both parties.
The average price of renting in Madrid and Barcelona at present has gone beyond the maximum figures seen in 2008 of €12.80 and €13.70 per square metre respectively, and now sit at €14.40 and €17.90 per square metre.
This means a decent-sized three-bed apartment could cost €1,790 a month to rent in Barcelona, or €1,440 in Madrid, and even a small one-bedroom flat would be €895 and €720 a month.
These costs represent increases of 15.6% for Madrid and 16.5% for Barcelona in 2016 alone.
The lowest hike, seen in Sevilla, is still 5.4% up over last year, followed by Palma de Mallorca at 9.7%, rising to 11.4% in Málaga, 17% in San Sebastián and a whopping 20% in Valencia.
The prices only relate to provincial capital cities – in the province of Valencia, a very large apartment can be rented in some towns for as little as €250 or €300 a month, but this is also reflected in the much lower buying prices.
Over the past year, the number of households in rented accommodation has gone up from 10% to 21.8% of the total, representing 4.1 million homes.
Although owner-occupation remains vastly preferred in Spain, with tenant figures way below the 33% average in the European Union – according to the Bank of Spain and Eurostat – the majority of young adults living independently rent rather than own.
Most potential long-term tenants are aged 22 to 35, able and prepared to move around the country for jobs, in full-time work, not able to buy a property due to lenders' restrictions, but often with enough income to enable them to bring up a child either as a couple or as single parents.
Many of these young tenants are in couples, since the financial crisis means single 20- and 30-somethings tend to continue living with their parents and will only move out when they want to live with a partner.
These data have been provided by the international property market consultancy CB Richard Ellis, and by the Caixa Bank's estate agency Servihabitat.
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