Expenditure on rent accounts for an average of more than a third of salary

In the current context of inflation and the consequent loss of purchasing power, the rent rose again by 7.4% in July compared to the same month of 2021, breaking the record in 12 provincial capitals. Added to the decrease in purchasing power is the tightening of the criteria for obtaining loans for house purchase. The forecasts included in the 'Survey on Bank Loans in Spain' prepared by the Bank of Spain, indicate that the trend will continue in this direction over the coming months.

“Entities continue to operate with the same criteria of prudence as in recent years. Yes, it is true that some entities are being more farsighted and anticipate future increases in the Euribor when they analyze the resulting fee with respect to the income of the mortgaged party, ”says the director of analysis of the Tecnocasa group, Lázaro Cubero.

Average percentage of salary allocated to rent

Catalonia

Madrid

Basque Country

Balearics

Spain

Cantabria

Canary Islands

Navarre

Valencian C.

Murcia

The Rioja

Andalusia

Galicia

Aragon

Castile and Leon

Asturias

Castilla la Mancha

Estremadura

Source: Own elaboration / ABC

Average percentage of

salary for rent

Catalonia

Madrid

Basque Country

Balearics

Spain

Cantabria

Canary Islands

Navarre

Valencian C.

Murcia

The Rioja

Andalusia

Galicia

Aragon

Castile and Leon

Asturias

Castilla la Mancha

Estremadura

Source: Own elaboration / ABC

On the other hand, the director of studies at Fotocasa, María Matos, highlights "the upward trend" in rental prices, which is at its "highest historical level". Among the causes of this rise, Matos focuses on the reduction in supply, which pushes the price up in a "very important" way.

During the first three months of the year, the Fotocasa surveys reflected a downward trend in the supply of rental properties. Matos affirms that if the demand remains stable in the second quarter of the year, while waiting to know the data for September – where an increase is expected, motivated, as it happens every year, by the movements of students who move to other cities to start the university course–, the situation will continue to become more and more tense.

Although the survey for the second quarter will not be available until the end of the month, preliminary data suggests that supply will decrease by 30% compared to the same period last year, which would imply more tension in the market and its consequent reflection in the price increase in rents.

“Since July 2021 we have detected a decrease in the supply of rental housing, especially in large cities, such as Madrid and Barcelona. We understand that the increase in rents is caused by this factor, a lower supply available» says the director of analysis at Tecnocasa.

This trend can also be seen in the supply of individual room rentals so far this year, with pronounced falls in the main capitals such as Palma de Mallorca (-78%), Barcelona (-73%), San Sebastían (-71 %) or Madrid (-59%), according to data from Idealista.

Most affected communities

When comparing the salary -referring to the 2020 salary structure survey, which includes the average gross salary in 12 payments- and the price per square meter in July with the average square meters per home, the result reflects that Spaniards spend on average 35.49% of the gross salary in the payment of the rent, Catalonia being the most outstanding case with 45.42% of the average gross salary destined to the payment of this item. It is closely followed by the Balearic Islands, where the average stands at 41.4%, and Madrid, with 39.13% of gross salary dedicated to paying rent on average.

The communities with the lowest rental pressure on salary are Castilla La Mancha, with 23.83% of the gross salary dedicated to this item, Asturias (24.83%) and Extremadura (28.3%)

The alternative in the mortgage does not seem favorable either. With the path of increases in interest rates set by the central banks, the Euribor continues to rise with no signs of moderation. “It is very likely that we will see a reduction in the number of second-hand sales in the second half of the year, since we were moving at all-time highs, in terms of second-hand sales (more than 600,000 in 2021). This situation, together with the rise in rates, will slow down the increase in prices produced in the last year and a half," concludes Cubero.

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