Rental prices demanded by landlords in Spain rose 3.3% in 2015, according to the property portal Idealista.com.
The average asking price for rents in Spain at the end of last year was 7 €/m2/month, meaning a flat of 100m2 would cost €700 per month to rent. The average includes all types of homes for rent, including holiday homes, but says more about the primary home market, which is much bigger.
The evolution of rental prices helps one understand the health of the housing market, as housing demand, supply, and pricing for both sale and rent are all linked in some way. In principle, rising rents are a good sign for investors.
Rental price expectations rose the most in Catalonia, Madrid and the Balearics, up 13% in Catalonia, 10% in the Balearics, and 8% in Madrid. On the other hand, rental asking prices were still falling in Galicia (-4%), Extremadura (-3%) and Asturias (-2%).
By autonomous region, asking prices ended the year highest in Madrid (11 €/m2/month) and Catalonia (10.5 €/m2/month). At the other end of the scale was Extremadura (4 €/m2/month).
BARCELONA RECOVERS LOST GROUND
By city, rents rose the most in Barcelona, where they have now recovered to their pre-crisis levels, say Idealista. They were up 23% last year to 15 €/m2/month. Rents are also up significantly in Tarragona (+14%) and Malaga, capital of the Costa del Sol (+13.5%). In Madrid they rose 9% in 2015.
Barcelona is the most expensive Spanish city for rents, followed by Madrid (12 €/m2/month) and San Sebastian (11.6 €/m2/month). At the other end of the scale is the Galician city of Lugo, where it cost just 4 €/m2/month to rent on average.
TWO SPEED MARKET
The rental market provides more evidence of a two speed property market in Spain, says Fernando Encinar, head of research at Idealista. “Although one can talk in general terms of an increase in monthly rents, one can still see a two speed market: On the one hand there are areas where demand and employment have not yet got off the ground, and the situation forces landlords to continue reducing their prices. On the other hand, in large cities prices are rising, in some cases by double digits.”
Economic growth, in particular employment, will be the “key to understanding the future behaviour of the rental market,” says Encinar. That implies Spain’s current political situation is one of the risks facing the housing market, as a stable Government with sensible economic policies is far from assured.