Mark Stücklin
Rental prices were stable, but new rental contracts in Barcelona declined by 23% in the first three months of rent controls, reveal the latest figures published by the Catalan regional government (Generalitat).
Rent controls were imposed on Barcelona and 139 other Catalan municipalities by the regional government (Generalitat) in collusion with Madrid and City Hall back in March (16th), as I reported at the time in my article on Catalonia’s third attempt at rent controls. Now that the Generalitat has published rental market data for Q2, we have figures on rental prices and the number of new rental contracts signed in the second quarter (April – June) when rent controls were in force to be able to judge how the policy is working out so far.
The Generalitat that collects data on all rental contracts signed in the region when rental deposits are lodged with the Incasol government agency, as required by law. We have to assume that most rental contracts will be registered with Incasol, but it won’t be 100%. How many rental agreements will be kept off the books? It’s hard to say, but it’s a fair assumption that the number will have increased with the introduction of price controls, which always encourage a black market.
We also have data on rental asking prices in Q2 from the property portal Idealista, which we can compare with contract rental prices.
Barcelona rental prices
As you would expect with rental prices being decided by bureaucrats, the average monthly price of new rental contracts in Q2 (1,132€/m) was almost unchanged compared to the same time last year (+0.7pc), and down by 5pc compared to the previous quarter (Q1 2024). The chart above illustrates how rental price growth came to a standstill in Q2.
Both the Generalitat and national government in Madrid have congratulated themselves for introducing rent controls that delivered these results. “The figures support the cap on rental prices in strained market areas,” says Sílvia Paneque – Councillor for Territory and Housing @ the Generalitat, in comments to the local press. A press statement from the Housing Ministry in Madrid said “With the price index and the extraordinary measures taken, the trend of 11 consecutive quarters of rental price growth has been reversed.”
However, if you look at rental asking prices published by the property portal Idealista (next chart), prices went up by 16pc in Q2, with the increase accelerating from 12pc in Q1 after the introduction of rent controls, and reversing a trend that had been downwards since the end of 2022.
If you compare the change in asking prices (€/sqm) with average monthly rental prices and rental prices in €/sqm you get the following chart. Contract prices turned down whilst asking prices shot up. What’s going on?
The most likely explanation is that landlords have stampeded into seasonal rentals to avoid rent controls and other costs of the Spanish Housing Law of 2023, and seasonal rentals have a higher asking price than long-term rentals. But there is not enough demand for seasonal rentals so you would expect there to be a notable fall in the number of rental contracts signed.
Barcelona rental contracts
So, how many rental contracts were signed in Q2? Just the lowest level in over fifteen years if you exclude Q2 2020, when we were in lockdown. There were just 7,939 rental contracts signed in Q2, 23pc down compared to last year, and 19pc compared to Q1. Compared to 2018, rental contracts are down 42pc. As the final chart below shows, rental contracts have been declining for several years now as Madrid and the Generalitiat have taken increasing measures to undermine landlords, culminating in rent controls in March.
Politicians and housing-activists are congratulating themselves for controlling rents, but they’ve also made the rental housing shortage in Barcelona much worse.
