Ten years later, rental asking prices are now higher than their boomtime peaks in six regional capitals led by Barcelona. Given how crazy the Spanish property boom was, you have to wonder is this sustainable in those areas where rental asking prices are setting new records?
This research comes from the Spanish property portal Idealista.com, based on rental asking prices in their database, which is one of the biggest in Spain.
Idealista reveal that rental asking prices are now higher than they were at the top of the boom in six regional capitals where prices have risen fastest, in some cases at a dizzying rate.
Rental asking prices have set new records in Barcelona (+20% above the boom-time peak), Las Palmas de Gran Canaria (+16%), Palma de Mallorca (+14%), Madrid (+7%), San Sebastian in the Basque Country (+6%), and Girona in Catalonia, home to the Costa Brava (+3%).
Rental asking prices in all other regional capitals are still below their boomtime peaks, but in all cases have risen above the lows they plumbed in the depths of the crisis. In Malaga, capital of the eponymous province that is home to the Costa del Sol, rental asking prices are just a fraction below their boomtime highs, whilst in Alicante, surrounded by the Costa Blanca, prices are still 7% below the previous peak.
In Zaragoza, capital of the eponymous province and the regional of Aragon, rental asking prices are still 41% below the peak, which gives you an idea of how uneven the Spanish property market recovery is turning out to be.
Compared to the troughs of the crisis, rental asking prices in Barcelona are now 59% higher, followed by Palma de Mallorca (+48%), Madrid (+32%), Las Palmas de Gran Canaria (+30%) and Valencia city (+30%). In Murcia, however, they are just 5% higher.
Buying a rental investment in Barcelona in the depths of the crisis around 2012 would have been a very good investment. You would now be looking at a hefty rental yield, and be sitting on large capital gains. But are such high rents sustainable in a country where incomes have not risen by anywhere near the same level?
I guess rental increases will start to cool a bit, having risen so far and so fast, but I also don’t expect rents to fall anytime soon. Rising rents in hot markets like Barcelona, Las Palmas and Palma, are being driven as much by foreign and tourist demand as local demand, so the relationship to incomes is not so important. Is that a good thing? I’m not so sure, but it is what it is.