January 16, 2021

Rent profitability plummets in Madrid and Barcelona

Rent profitability plummets in Madrid and Barcelona


The rental market begins to show symptoms of exhaustion. After rising strongly in recent years, the prices of leases They seem to stagnate. And this is making it increasingly unattractive to invest in buying an apartment to rent later. At least, in cities Madrid and Barcelona.

According to the latest Trends Report of the Real Estate Sector, prepared by the Appraisal Company (ST), gross rental income has plummeted by 15.6% in Barcelona and 8.3% in Madrid. Nationwide, profitability has fallen by 3.3%, although there are cities that remain on the rise.

«In the annual comparison, highlights the growth of Navarra, Toledo, Granada and La Coruña, which present variations in the annual rental yields of 12.3%, 8.5%, 7.7% and 5.3% respectively, with respect to the previous year », explains Sociedad de Valción.

While the rental it slows down, buying and selling remains on the rise, which is hindering access to housing. According to the report, Spaniards need 7.3 years of full salary to buy a house. In the case of residents in the Balearic Islands, this period more than doubled to 15.7 years.

The indicator, the appraiser highlights in its report, is calculated based on the coefficient between the market value of the home and the average gross annual income offered by the INE. There are notable differences between communities, as for example in La Rioja «Alone» 4.8 years of full salary are needed to access a home.

This disparity is maintained when the variation in the price of housing is analyzed. And while housing rises at a rate of 10.7% per year in the Balearic Islands, in Salamanca the increase is only 0.3%. Even Madrid and Barcelona show opposite trends: while in the capital prices accelerate to 11.4%, in Barcelona there is a small slowdown that leaves the rebound at 10.3%. At the national level, according to the Appraisal Society, the average price of housing in Spain last year it rose by 5.5%, standing at 1,613 euros per square meter.

Less mortgages

For the appraiser, this market evolution is not worrisome. To begin with, because it is very conditioned by the price spikes produced in Madrid, Catalonia and the Balearics. And, in addition, these increases are not impacting the mortgage market.

«Since the change in trend in the 2011-2012 cycle, the difference between the mortgages contracted and the number of transactions carried out has not stopped increasing in favor of the latter. The reason behind this behavior could be found in the different types of buyers in the current market, "the appraiser explains in her report. Although loans grew by 10.3% last year, they still stand at 345,186 contracts per year. Supone less than 25% of mortgages that were signed at the dawn of the real estate "boom".

ST also regoe in the report its Real Estate Confidence Index of Valuation Society, which has registered a notorious decrease in this first quarter of 2019, marking a decline of 1.1 points, to be placed at 55.9 points out of a maximum of 100 At the end of 2018, this index, which reached its lowest level in 2012, was set at 57 points.


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