Q2 Home Rental Prices Register Greatest Rise in 8 Years
Posted on July 28, 2016 in Property
The average price of renting a home in Spain increased by 2.4% in the second quarter of the year to stand at 7.41 €/m2 in June, according to the latest real estate index data from property portal, fotocasa. This quarterly increase in the price of rental housing continues the trend that prevailed during 2015, when the prices began to rise following eight years of widespread declines.
According to Beatriz Toribio, head of research for the portal, the rental market has shown strong dynamism in recent years and prices are increasing over a good part of the country, with specific areas of large cities and main tourist destinations even recording double-digit increases of the kind not seen in the last eight years. Toribio also cited the high demand and the high returns offered by this market as the main reasons for the price increases.
In fact, the increase registered in the second quarter of the year is the most significant rise recorded in a second quarter in the portal’s real estate index since 2007, when prices rose by 2.8%.
Rental housing prices increased in 15 regions in the second quarter of the year, over the previous quarter, and rose in 16 regions, year-on-year. Specifically, the year-on-year increase in the second quarter was 4.8%, the second highest increase registered in the index which goes back to 2006. The highest year-on-year increase to data was recorded in May this year, when rental prices increased by 5% over May 2015.
In addition, the report noted that rental prices have registered positive quarter-on-quarter increases for six months now, since January, and have also registered 16 consecutive months of positive year-on-year results, since March 2015.
Since the maximum prices registered in May 2007 (10.12 €/m2 per month on average) the price of rental housing has accumulated a decline of -26.8%. Three regions have recorded declines in excess of -30% since the maximum levels reached: Aragón (-39.6%), Castilla-La Mancha (-35.2%) and Cantabria (-33.7%).
With regard to the ranking of prices, Madrid has overtaken the Basque Country and Catalonia for the first time in recent years as the region with most expensive home rental prices. Specifically, rental prices in Madrid stood at 10.36 €/m2 per month in June, followed by Catalonia (10.24 €/m2 per month) and the Basque Country (10.16 €/m2 per month). In contrast, the two regions with the most affordable rental prices were Extremadura (4.56 €/m2 per month) and Castilla-La Mancha (4.69 €/m2 per month).
Looking at the provinces, some 39 of them recorded increases in home rental prices over the previous quarter, ranging from 7.2% in Huelva to 0.2% in Burgos. Nine provinces recorded declines in their rental prices, ranging from -0.1% in Huesca and Vizcaya to -3.3% in Cuenca, while prices remained stable in Navarra and Girona.