There appears to be some dispute as to what is happening to the rental market. One thing that can be agreed is that average rental costs increased over the summer, but by how much depends on who you ask.
According to the quarterly rental price report from pisos.com, the average rented home in Spain in September had an average area of 115m² and an average monthly rent of 859 euros. This represents a monthly increase of 2.26%, a quarterly increase of 5.92%, and an annual increase of 16.08%.
However, according to a similar report from idealista, rental prices actually decreased by 1.3% during the third quarter. Idealista also state that the annual increase was closer to 12.6%. The idealista report states that in Barcelona, typically the most expensive rental costs in Spain, prices have already fallen by 5.5% year-on-year. In Madrid, prices rose by 7.4% year-on-year, far from the double-digit increases experienced in previous quarters, according to the report.
Taking both the figures from idealista and pisos.com, we get an average quarterly increase of 2.31%.
The pisos.com report suggests the average price for a one-bedroom property was 731 euros p/month. The average price for a two-bed property was 863 euros per month. An average three-bedroom property costs 949 euros p/month, while a four-bedroom property has an average cost of 1,366 euros p/month.
The continuing increases in rental costs are complicating access to housing in some cities. According to Ferran Font, director of studies at pisos.com, “finding a flat that comprises a reasonable percentage of monthly income is becoming the exception in large cities such as Madrid or Barcelona.” Font also says that many tenants have long since left to live in central districts, but the problem is that in the peripheries there are also few offers with a sensible price-quality ratio.
Also, the arrival of more tourist rentals is another element pushing prices upwards. “There are few tenants who, at the time of renewing the contract, have been presented with an increase they cannot manage, a result of the landlord’s desire to put the property in the holiday rental market,” says Font.
In addition to the tourist phenomenon, Font adds that “the blockade of new building licences and the depletion of second-hand housing stock moves the demand for purchasing to renting, a market that does not feed its own inventory at the speed it should.” Font is calling for dialogue between the government, large property owners and private owners: “We must take action to create a rental market that is abundant, of high quality and at prices adjusted to salaries.”
For Fernando Encinar, head of studies of idealista, “the data of this report confirms that in spite of the widespread belief of the existence of a bubble in the rental market, there is none. By definition, it cannot exist in the rental market, since bubbles only occur when assets are bought at a price above the norm. In the rental market, prices have risen due to a mismatch between supply and demand. In fact, with the end of the summer we have seen how rental prices have moderated throughout Spain: in the whole country rents have fallen in price in the third quarter of the year. If we go down to capitals, rents fall in almost half of the markets analysed and grew moderately in the rest. In Barcelona, prices have already fallen by 5.5% year-on-year. In Madrid, prices rose by 7.4% year-on-year, far from the double-digit increases experienced recently.
Eight autonomous communities registered higher prices than they had three months ago, according to idealista. The biggest increase was registered in Galicia, where prices grew by 3.4%. It was followed by the increases in Navarre (2.7%), Madrid (2.6%), La Rioja (1.7%) and Euskadi (1.2%). The biggest drop, however, has occurred in the Balearic Islands where the average price fell by 9%.
Madrid (15.3 euros/m²) is the most expensive autonomy, followed by Catalunya (14.7 euros/m²) and the Balearic Islands (13.5 euros/m²). On the opposite end of the table we find Extremadura (4.2 euros/m²), Castilla-La Mancha (4.9 euros/m²) and La Rioja (5.8 euros/m²), which are the most economical communities.
In Andalucía, prices fell by 1.2% during Q3. On the annual variation prices increased by 11.4%. The current average price per square metre in Andalucía is €7.90.
Seven Capitals Exceed 1,000 euros per Month
According to the quarterly report from pisos.com, the highest average rental costs were found in Madrid (€1,501 p/month), the Balearic Islands (€1,179 p/month) and Basque Country (€1,099 p/month). Meanwhile, the cheapest rents were in Extremadura (€441 p/month), Castilla-La Mancha (€496 p/month) and Galicia (€524 p/month).
The most striking increase in the third quarter was seen in Madrid (7.60%), while the largest fall occurred in Galicia (-6.76%). Madrid (20.56%), Cataluña (20.02%) and the Balearic Islands (19.09%) showed the highest annual increases.
Looking at prices by provinces, according to the report from pisos.com, in September 2018 the most expensive was Madrid (both reports agree on this), with 1,501 euros per month. Following were Guipúzcoa (€1,314 p/month) and Barcelona (€1,210 p/month). The cheapest province was Teruel with an average of 385 euros per month. Other provinces at the cheaper end of the table include Ciudad Real (€402 p/month) and Cáceres (€413 p/month). Pontevedra was the province to see the largest increase (10.68%), while Lugo saw the largest fall (-9.56%). Looking at the year-on-year variations, Madrid saw the biggest increase (20.56%), while Huelva saw the largest fall (-10.30%).
Looking at provincial capitals, Madrid has the most expensive rental costs, with an average cost of 1,758 euros per month. Following were Barcelona (€1,749 p/month), and Donostia-San Sebastián (€1,513 p/month). Teruel was the cheapest with an average monthly rent of 385 euros. Vitoria saw the largest quarterly rise (13.02%), while Tarragona saw the largest fall (-18.56%). Interannually, the largest increase was in Cádiz (20.33%), with Córdoba (-15.07%) recording the largest fall.