Average rental prices are hitting record highs after increasing in 2016 and 2017. In two regions, Catalonia and the Balearic Islands, they’re already beating the record set in 2007.
In a further five regions (Madrid, Castilla y León, Basque Country, Extremadura and the Canary Islands) average rentals are on the point of matching those registered in 2007, just before the property bubble burst. Figures are from the Spanish Ministry of Public Work’s Property and Land Report for Q3 this year.
In comments to the Spanish press, departmental chief minister Íñigo de la Serna has highlighted the “obvious strength” of the rental market in Spain, pointing out that it is doing “better than the property market”. He rejected, however, the notion that rental prices are too high.
“Some are saying that rental prices are very high, higher than ever, but this isn’t true,” he argues. According to his data, the average price for a rental in Spain was €8 a square metre a month at the end of September, 20% below the record €9.60 registered in September 2007.
Record rental prices in Catalonia and Balearics
De la Serna does admit, however, that the gap between rental prices in regions has widened over the last few years, and that in two of them – Catalonia and the Balearic Islands – prices are already higher than they were at the last peak in 2007.
At the end of Q3 in Catalonia, average rental prices stood at €12.30 a square metre a month, which as well as being the highest in the country, is 1.3% higher than the record €12.10 registered a decade ago. Rentals have gone up by 17.2% in the last year. “These are figures from before the events in Catalonia since October,” he pointed out.
In the Balearic Islands, average rentals were €9.70 a square metre a month, 1.4% higher than the record €9.60 in 2007. They’ve gone up by 9.6% so far this year.
Increasing demand for rental accommodation is driving prices up all over Spain, with the percentage of households now living in rented homes increasing to 22% today from 17.8% in 2001. And in popular tourist destinations like Catalonia and the Balearic Islands, the surge in holiday lets could also be adding to price pressures.
The Minister has again rejected the call from some institutions such as Barcelona City Council for rental prices to be regulated. He argues the market should be left to fix the price as interfering in the market will just reduce the supply and drive up the price even further.
As for the effect of holiday lets on prices, he pointed out that this is the responsibility of regional governments and councils so “they should be the ones to regulate them”. At national level, the Minister believes that the “recipe” for the rental market should be to increase supply. “Councils can help here too by putting social housing on the market” and improving availability of rental properties. He said that his department intends to introduce a Housing Plan at the beginning of next year, which includes financial assistance for tenants and developers.
Regional rental prices in Spain
At the end of September, five regions were about to top records set ten years earlier. In the Madrid region, after a 11.4% rise in 2016, average rentals stood at €11.70 a square metre a month, just 0.9% below the record €11.80 in 2007. In Castilla y León, rentals were €6.10, compared to €6.40 in 2007, after a rise of 2.8% in 2017. In the Basque Country, they stood at €10.90 (€11 in 2007), 5.5% more. In Extremadura, rentals were €4.80 (€4.90 ten years ago), 3.2% higher. And in the Canary Islands, they were €7.20 (€7.40 a decade ago), 11.6% higher than 2016.
At the other extreme, in Andalusia, average rentals stood at €6.50, 16% less than the €7.80 in 2007, despite this year’s increase of 5.1%. In Aragon, they were €6.90, 26.6% lower than the €9.30 registered ten years ago, after going up by 1.9%. In Asturias, rentals average at €6.50, 8.1% less than 2007’s €7.10, after an increase of 3.1% in 2017.
In Cantabria, it costs an average of €7.10 to rent, (€8.20 ten years ago), 4.8% more than in 2016. In Castilla La Mancha, it costs €5, compared to €7 in 2007, after a rise of 4.8%. In the Comunidad Valenciana, average rentals stand at €6.20 a square metre (€7.80 in 2007), 6.9% more. In Galicia, rentals cost €5.60 (€6.50 in 2007), 0.5% higher; in Murcia, €5.70 (€7 ten years ago), 2.5% more; in Navarra, €7.40, 5.1% more and in La Rioja €5.40, 0.5% higher. Data isn’t available for 2007 in Navarra and La Rioja.