The Bank of Spain has confirmed that while the price of the sale has not yet reached the level prior to the crisis, the one of the rents yes that has been placed above that level, according to aims the institution in an analytical article.
In fact, it also highlights that in 2018, there was a weaker growth in the rental price in relation to previous years, Even a drop was observed in Barcelona, a city in which a deceleration of the sale price has also been seen.
Likewise, the article also highlights that the trend towards greater weight of rent is widespread, especially in the age group that ranges between 16 and 29 years, followed by the age group between 30 and 44 years.
For the Bank of Spain, this evolution could be explained by factors linked to the impact that the economic crisis has had on these segments of the population, but possibly also by resorting to sociological factors linked to changes in the preferences of younger generations.
The institution also highlights that the tax bias that would favor the purchase of housing over rent has been reduced in this period due to the fiscal changes introduced.
Specifically, on the taxation of housing, the Bank of Spain recalls that the elimination of the deduction for investment in habitual residence and the increase in taxes on housing and purchase tenure are the "most relevant" changes in relation to the reduction of the tax bias in favor of the purchase of housing in front of the rent.
In fact, from their point of view, the tax benefits on rent for households continue to be "reduced" in the international comparison.
Also, in line with the opinion of other agencies, the Bank of Spain has also highlighted that the housing market in Spain is experiencing a "high heterogeneity" by the location of real estate, the type of housing and also the nationality of the buyers.
It also highlights that gross capital formation is showing "a significant dynamism, especially in the case of investment not linked to construction, which exceeded the level prior to the crisis over the past year." However, it points out that the investment linked to construction, within this trend of improvement, "has registered a less dynamic evolution".
This behavior, according to the Bank of Spain, is due both to the readjustment of investment in housing that has reached levels close to 5.5% of GDP in 2018, compared with 12% of the crisis; as to the rest of the investment in construction maintained in the most recent years "a reduced weight in the product", going from representing 9.4% of GDP in 2006 to 5.1% registered last year.
The transactions, below the pre-crisis figures
On housing transactions, stresses that, although reflecting the upward trend that the sector has experienced in the last five years, they represent "a level much lower than those that were carried out in the period of real estate expansion before the crisis "
Thus, it notes that while in 2018 more than 550,000 home sales were registered, 10% more than in 2017, this figure was around 885,000 transactions during the period from 2004 to 2007.
On the other hand, it notes that the initiation of new construction has also shown an improvement trend, although "with a certain delay", possibly due to "the high stock of unsold homes as a result of the strong increase in supply during the previous expansive phase, that was not absorbed during the crisis. "
In any case, he believes that the level of housing initiation continues to be "reduced in historical terms". On the adjustment between the demand and the supply of new homes, the institution has indicated that the slow correction of the stock could be reflecting "a certain mismatch" between the characteristics of the homes demanded and those of the homes available for sale.
With respect to the nationality of the buyers, it is worth noting that the British are still the buyers with the greatest weight over the total (14%), although it notes that there has been a significant reduction since 2017, "possibly related to the Brexit", since its average between 2008 and 2016 it was 19%.