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April 21, 2017

Rent of real estate property in Spain: price increase

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Rent of real estate property in Spain: price increase

Rental housing prices in Spain increased by 8.8% in the first quarter of 2017, which means that the price per square meter has been set at 8.9 euros per month, according to the evolution of the report on the rent prices, published by the online portal Idealista.

Fernando Encinar, director of research department of mentioned real estate portal, commented that "one of the consequences of the bursting of the bubble in the housing market in Spain is that the Spaniards finally abandoned the belief that dominated the market for many decades what rent of a house or an apartment in Spain is simply throwing money away. After analyzing data of the report, we can now surely say that rents recorded a sharp rise in prices during the last year, but it is also true that rental prices in Spain, at least the main part of the country, haven’t yet reached the indicators that took over the market ten years ago. However, the Spanish rental market currently appears in almost all local media titles, due to their high prices. The reason for this lies basically in the change in the sector that now sees the rental of residential property in Spain as the main option for a large percentage of the population."

This huge growing demand, meanwhile, basically consists of two different groups. Some of those were forced to enter the rental market as they haven’t been able to purchase a residential property in Spain. Many of them, however, can afford monthly mortgage payments, but do not have enough savings to pay the entrance fee, which is required when applying for a mortgage in Spain (around 30% of the total cost of the real estate object). On the other hand, a large number of people who voluntarily choose to live in a rented apartment or house in Spain, although they could have chosen other options, are aware of all the risks involved by signing a long-term loan, say the experts of Spanish real estate market.

Meanwhile, all regions of the country recorded an increase in rental prices of real estate compared to what they were three months ago. The largest increase was recorded in the Balearic Islands, where prices increased by 15.9 %. Behind them we can find Madrid (5.1%), the Canary Islands (5%) and Catalonia (4.9%). The slightest price increases, however, were observed in the autonomous regions of Aragon (0.4%), Extremadura (0.4%), Castilla-La Mancha (0.6%) and Asturias (0.9%).

Catalonia (13.9 euros / m2), besides, is the most expensive autonomy in terms of renting residential properties in Spain. It is followed by the Community of Madrid (13.5 euros / m2), the Balearic Islands (11.8 euros / m2) and the Basque Country (10.6 euros / m2). On the opposite side are situated Extremadura (4.1 Euros / m2), Castilla-La Mancha (4.5 euros / m2) and La Rioja (5.1 Euros / m2).

The ranking of the most expensive provinces lead Barcelona (15.7 euros / m2 per month), Madrid (13.5 euros / m2) and Guipuzcoa (12 euros / m2). The province of Jaen, on the other hand, is the most economical to rent an apartment or a house in Spain with the price of 3.6 euros / m2 per month; as well as the provinces of Teruel (3.7 euros / m2) and Avila (3.8 euros / m2).

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