Rent drop? Neither this year nor in 2024

Rent drop?  Neither this year nor in 2024

Is it possible that the rental prices will go down this year or next? The short and direct answer that they give from Fotocasa is no. In the opinion of this real estate website, it is unlikely that rents will go down this year or even next yearwhich leads those who seek to live for rent to a difficult scenario among new records in the coming months.

April closed with the highest rental prices that Fotocasa has registered, 11.69 euros per square meter after a 7% rise. In May, its spokesperson and head of Studies, María Matos, expects them to rise "somewhat less, but we do not see anything on the horizon that leads us to think that prices will calm down, that they will surely exceed their records again this year and the coming," he warned.

The situation of rental prices is so serious that, according to Matos, in 2022 or 2023 they have peaked in all the autonomous communities, with the exception of Aragon and Castilla-La Mancha. And in the case of the two most powerful markets, that of the cities of Madrid and Barcelonathe study service of the real estate website has also detected that rents are at maximums in all districts of both cities.

The intense increase in rental prices is causing even many bouncers from the buying and selling market to no longer be able to consider this option to live either. Potential rental applicants have been reduced by three percentage points since August, from 16% to 13% of those surveyed by Fotocasa for its "X-ray of the Housing Market 2023" because «They have found a very hermetic, compact market, with prices at all-time highs. They have hit the wall of prices », explained Matos during the presentation of the analysis. The contraction in supply has had a lot to do with the rise in rental prices, which has fallen from 3% to 2% to reach all-time lows. "A lot of housing that could be rented has gone to the buying and selling market and a lot also to the vacation market, which creates an imbalance that makes prices rise," says Matos. This withdrawal of housing from the rental market has to do to a large extent with the feeling of legal insecurity that many homeowners perceive. More than half of the reasons for leaving them have to do with problems with tenants, fear of not receiving rent...

In the short term, Matos believes that the situation will not improve even if the measures planned by the Government to promote social housing are activated quickly. In the best of cases, says the head of Studies at Fotocasa, they would bring 100,000 units to the market in five years. "But 2.5 million rental homes are needed just to respond to current demand: 97,000 in Madrid, 94,000 in Catalonia, 114,000 in Andalusia...», he recounts.

The panorama on housing that Fotocasa collects is completed with a situation also complex in the market for sale, in which the percentage of Spaniards who have carried out some action related to their demand has also fallen by one percentage point. The market has receded «due to the rise in interest rates, which makes it difficult to access the purchase of housing for the most expensive loans; and the rise in prices, according to Matos. "Rises in interest rates have an impact on an increase in mortgage payments and, as a result of this, the number of home purchases is significantly reduced, because citizens see their ability to finance themselves diminished," explains Matos. ""In addition -he adds-, this rise in rates causes increasing uncertainty about how the real estate market will evolve in the short or medium term, which is why some buyers postpone or, directly, abandon their intention to buy a home."

The prices do not help to encourage buyers either. In April they rose 10%, to 2,113 euros per square meter because «Spain has been underproducing housing for the last fourteen years», according to Matos. To this is added, in addition, a latent demand that, although it cannot face purchases, maintains pressure on prices.

The main victims of this perfect storm for both buying and renting are the youths. Although those between the ages of 18 and 35 are the most active in the market, the truth is that in the last six months the demand for housing from this group has plummeted from 55% to 46% because "they hit the wall of overprices of the rent that expels them from this market. Because the purchase was already out before, ”they say from Fotocasa.