Over the last twelve months, the demand for rental housing has fallen by 36%. In 2017, 14% of people over 18 years old had rented or sought to rent a home. In 2018 that percentage is 9%. This is the conclusion of the study “X-Ray of the Housing Market 2017-2018” carried out by property portal fotocasa.
The reason for the drop, according to the report, is the fact that there are fewer young people (aged 18-24) actively looking for rental housing than there was in 2017. Between the ages of 18 – 24 there is a decrease of 14 points with respect to the previous year. Between the ages of 25 and 34 the fall is 9 points.
“This report reflects that the sharp increases in rental prices have taken a toll on young people, significantly reducing their demand and, not least, their vision of this way of life. It can be seen that in comparison with the previous year, the purchase option is stronger than the rental option, especially in the 25 to 34 segment,” explains Beatriz Toribio, director of studies at fotocasa.
In addition, it is observed that in almost all age ranges there is a lower proportion of aspiring tenants than in the previous year. However, in the age range of 25 – 34 this year has seen a rise of three points among those who have purchased a home: from 6% in 2017 to 9% in 2018.
When we look at the supply of rental housing, there are no significant variations compared to last year. The percentage of private owners who put their homes out for rent is practically the same as a year ago. This catches the attention since, according to the report, sales are registering historical rises that have not seen since 2006 and some large cities have reached highs not seen since before the crisis.
The Buying and Selling Market is Maintained
The report also highlights that the behaviours of the sales market are very different from the rental market. In the sales market, we are seeing the same patterns as seen in 2017. 13% of Spaniards have participated in buying or selling property in the last 12 months, compared to 14% in 2017.
“Despite the improvement in the economy and the consolidation of financing, the demand for housing to buy by individuals remains at levels very similar to those we saw in the previous report. This data reinforces our vision that the recovery of the housing market will be slow and moderate”, Toribio added.
“We have been seeing for some time through different reports that the Spanish mentality was changing in favour of renting. But in the last year, according to the results of this study, it is observed that this trend has slowed,” concludes Toribio.
54% of the report respondents agreed that rent costs have risen to much. They now think it more financial beneficial to pay a mortgage than rent. This opinion is strongest within the group of 25 to 34 years. Only 11% of the population disagreed with this statement.
Respondents who believe that buying a home is a good investment now number 53% compared to 44% in 2017. Those who agree a property is the best inheritance that can be left to children increased from 39% to 47%.
Additionally, the number of Spaniards predicting another real estate bubble is increasing: up from 23% in 2017 to 36% in 2018.