Rental prices will increase around 2%, a moderate growth compared to previous semesters
 Wednesday, 24/10/2018

  • The average gross rate for a rental in Spain is 5.6%, lead by Castilla-La Mancha, the Community of Valencia and the Region of Murcia.
  • The number of rental homes in Spain has increased a 7% compared to last year, reaching almost 105,000 housing available.
  • The average rental price is higher in the Community of Madrid, Balearic Islands, the Basque Country, Catalonia, Canary Islands and Ceuta.

Barcelona, 24 October 2018.- Servihabitat Trends, the Servihabitat market research and analysis platform, has published its fifth report on the “Residential Rental Market in Spain”. The report, which was prepared using official sources, its own data on the rental property portfolio managed by the servicer, and the leading real estate portals, reveal that the residential rental market still shows indicators of positive progress, although it foresees a stabilization period.

The Spanish population that lives in a rental home keeps growing, especially among young people
According to data from Eurostat, in 2017, 22.9% of the Spanish population lived in a rental home, compared to the 22.2% of 2016. The new results show how in 2017 has continued the increase of the population living in rental homes paying market prices, from 10.0% in 2004 to 14.3% nowadays.

In terms of data by tenants’ age, it is relevant the number of young people opting for rent as their residential option. Almost half of households between 16 and 29 years old live in a rental regime at a market price, going from 47.8% in 2016 to 48.9% today.

Multi-family homes with around 75 sqm of floor space and under 35-years-old tenants: these are the main homes rented
According to the Servihabitat Network of partner agents (APIs), the percentage of people under 35 living in rented homes is 69.5%. This percentage grew up to 73.6% in March this year. Therefore, the percentage of people between 36 and 45 years old increases by 2.5 percentage points.

In terms of the rental home profile, 27.6% of primary multi-family homes in Spain are rented and for single-family homes is the 13.8%. Besides, 48.9% of the rented homes have a surface area under 75 sqm, while the 26.5% has between 76 and 105 sqm.

The average time to rent a home in Spain increases slightly
The number of months to rent a home (average value) in Spain has increased slightly, from 1.67 months in March 2018 to 1.77 in September this year. Even so, this change has not reached the Community of Madrid and Catalonia, in which the average time to rent a home keeps decreasing to less than one month and a half (1.41 and 1.44 respectively).

Rental Housing Offer in Spain

Almost 6 rental homes for every 1,000 households in Spain
The number of rental homes available in Spain is 104,7400, which is 7% more than a year ago and 16,4% more compared to March 2018. This is equal to 2.2 available homes for every 1,000 inhabitants and 5.7 for every 1,000 households.

This change in the size of the available offer can be caused by the slight increase in the average time in which a home is rented or the opinion that is held about the volume of operations during the next semester.

The regions where this increase from the estimated figures one year ago stand out are, in this order: Balearic Islands, Catalonia, Community of Madrid and Canary Islands.

Catalonia, Andalusia and the Community of Madrid are highlighted with a supply of more than 18,000 homes, although Asturias, Cantabria, Castilla y León, the Community of Valencia and the Balearic Islands also have an offer of rental homes per inhabitant and household that is higher than the national average.

Average Home Rental Price

The Community of Madrid, the Balearic Islands and the Basque Country, is where rental prices are highest
The average price for a rental home with 80–90 sqm of floor space in Spain is €710, 4.41% more than six months ago.

In general terms, the communities that will show a stable trend in prices are Aragon, Balearic Islands, Cantabria, Castilla y León, Castilla-La Mancha, Extremadura, Basque Country and the two autonomous cities.  In the others, the trend expected for the next few months is still upwards.

The Community of Madrid, the Balearic Islands and the Basque Country are top of the list with regard to rental prices for rental homes with 80–90 sqm of floor space, followed by Catalonia, Ceuta and Canary Islands.

The average price increase during the next six months is expected to be 1.5% - 2%, still hinging on the markets of large cities and their metropolitan areas, along with the major coastal markets.

Castilla-La Mancha, the Community of Valencia, the Region of Murcia with higher-than-average rates of return
The average gross rate of return for a rental property in Spain is 5.6%, although certain autonomous communities such as Castilla-La Mancha (5.7%), the Community of Valencia (5.7%), and the Region of Murcia (5.9%) have average annual gross rates of return that are higher than the national average. By provinces, Huelva, Las Palmas and Valencia maintain profitability values higher than the national average, along with Soria, Ciudad Real, Toledo and Murcia.

Profitability of Home rental in Spain

Taking all indicators into account, the development of the rental market in Spain still show good values, however, after several semesters of continuous expectations of growth in almost all of them, some of them are starting to show signs of depletion.

One the one hand, the change in trend seen in the offer volume has several causes. Among them the fact that home owners immediately release it to the market and the distance between the price at which the owner is willing to lease their property and the amount for which the tenant is willing to pay has increased slightly compared to previous semesters.

On the other hand, the price of rental homes has been growing constantly for three years and this rise in rental prices is creating more tension in the market, so the tenants are less willing to increase their financial effort.

In this sense, Juan Carlos Álvarez, General Manager of Servihabitat's Real Estate Business, considers that "the new results show how in 2017 has continued the increase of the population living in rental homes. The change of mentality among the youngest population, the geographical work mobility and the greater difficulty to emancipate and own a housing are three of the factors that are contributing to this rise. But right now, this market is stressed by the offer and the demand, a situation that translates into a progressive increase of prices in the last years". Álvarez also points out that " the solution lies in finding formulas to increase the offer in order to stabilize and adapt a market that still has possibilities to develop in Spain".

To view the report, please visit the following link: Residential Rental Market in Spain

About Servihabitat

Servihabitat is one of the major servicers for comprehensive management of mortgage and property development loan portfolios as well as property assets. Its experience of over 25 years in the market and the high volume of assets being managed consolidate the position of the company as an industry leader.

A highly qualified professional team and a first-party technology platform provide Servihabitat with an independent and differentiated operational methodology capable of meeting all demands in the financial and property asset management cycle.

For more information:

Montse Castellana (mcastellana@tinkle.es / 679 98 33 10) o Eva Anaya (eanaya@tinkle.es / 659 72 04 83)