Low rental yields (gross) imply that property prices have not fallen enough, according to new research by Idealista.com, a property portal.

The highest gross rental yields in Spain are to be found in the Catalan province of Lerida (4.7pc), followed by Las Palmas in The Canaries (4.5pc) and Málaga, home to the Costa del Sol (4.3pc). These rental yields imply around 22 years of rental income to pay for the average property (see table below).

The lowest yields are in the North of Spain, with yields of just 2.9pc in the Galician province of La Coruña. That means the average property in La Coruña would cost almost 35 years of rent.

Idealista calculated rental yields per province for Q1 20011 by dividing the average rental asking-price by the average sales asking-price, both in terms of €/m2. Asking prices are not a perfect guide to market prices, but they are the best guide we have.

These figures do not distinguish between primary and holiday homes, and probably overstate expect gross rental yields for holiday-homes on the coast. Net rental yields for foreign owners are likely to be very low, in the 2pc range or less.

Considering you can get a 6pc net rental yields on prime property in West London (see related forum discussion), a safe and liquid property asset if ever there was one, you have to ask yourself what sort of gross rental yield investors should demand on the Spanish coast. I would say 10pc minimum, implying that prices are still way too high.