Rents In Spain Fell For The First Time Since The Great Depression
2021-02-07 | by CusiGO
Falling rents are no longer unique to big cities. For the first time in years, Spain’s average income has fallen or stagnated on major real estate portals. According to fotocasa, the coronavirus crisis cut off continuous growth since July 2015 in January, and idealists cut off growth a year ago in June 2014. In big cities, however, there is no money for leasing.
In the early days of the epidemic, real estate portals in major cities began to record declining revenues. Monthly rents are cheap, which is beginning to reflect on the national average. However, this figure is lower than that of the same period last year, that is, the rent of a certain month is still higher than that of the same period last year. This trend was broken in 2021: idealists believe that the average rent per square meter in Spain last January was 11 euros, 0.1% lower than 12 months ago. It’s not a big drop, but it’s very important: it hasn’t happened since June 2014.
Fotocasa and apartment A the same trend is reflected in the country’s statistics. For fotocasa, Spain’s average income stagnated (0%) in January after 65 consecutive months of growth. apartment This was the biggest drop, down 1.8% year-on-year, although the portal has noted a slight 0.1% decline in November.
In all three cases, the January data was a turning point in December, when it was a coincidence that, despite the pandemic, the average income in 2020 was higher than at the beginning. The portal must be considered as collecting the bid price (as requested by the landlord) rather than the price at the end of the contract. That’s why economist Gonzalo BernardOs, director of the master’s degree in real estate at the University of Barcelona, points out that this “reflects the upward trend better than the bear market” and believes that real prices may have started to fall a few months ago.
Among these reasons, BernardOs mainly refers to “oversupply”. According to a recent casafari study, the number of houses available for rent in Spain surged 178% last year. The authors of the report point out directly that the transfer of tourism housing to traditional leasing is the main reason.
In addition to this phenomenon, in large cities and coastal areas, tourist apartments are looking for alternatives to the lack of tourists due to family financial difficulties. “If you suddenly find out you’ve been laid off, you’ll find you have to pay less,” said l á Zaro cubero, head of analysis at tecnocasa group “A lot of people leave their original homes to look for cheaper ones, and we’ve found this reason in some cities during the first movement of confinement,” he explained.
In addition, due to the demand of telecommuting, we need to move to a larger floor. “People want to pay the same, but a few feet more,” cubero points out This has also led to a lower average income, which both experts believe is consistent with the portal’s move. On the portal, rents in big cities have begun to drop, and these cities have received more tourists and traveled more for work or study reasons.
That’s why BernardOs points out that in the long run, “in small towns, rents won’t be that low.” “In an average capital, the average income gap is 30%, but in Barcelona or Madrid, on average, there is a 200% income gap between the most expensive and cheapest regions.” In short, house prices in the two cities have fallen by more than what the economist calls “the biggest oversupply of rental housing since the advent of democracy.”.
According to the portal website data in January this year, the housing prices of more than 500000 residents in cities continued to fall. In Barcelona, all three cities agree that house prices have fallen by double digits compared with 12 months ago. In Madrid, house prices have also fallen month by month since mid-2020, with idealists saying that house prices have fallen by 8.6% from a year ago, a smaller decline. The biggest crash of all records is apartment Seville (- 14.78%).
In short, all the statistics show that both pound and Zaragoza have experienced a serious setback, which is best described in all three cases. Compared with December last year, housing prices in all major cities have declined, with only Valencia’s fotocasa data showing a slight increase of 0.1% per month; however, according to the same source, this does not prevent housing from being 7.4% cheaper than the same period last year. Zaragoza and Valencia, in addition to the least decline, are also the lowest average rent, and there is synchronization between the portals.
Experts believe that the waterfalls in the metropolis continue to accelerate, indicating that there is still a long way to go before desert crossing. “This year’s economic problems will not be solved, I hope health care will be solved, and the logic is that the downward trend will continue,” cubero said. “The opposite is almost impossible and from then on, if all goes well, the decline will start to slow down,” he added
However, tecnocasa analysts also point out that the recovery will be reflected more quickly in leasing than in selling prices, as happened in the impact of the coronavirus crisis: “rents are more flexible and these trends appear earlier. If someone decides to change their house, they can change it in two months. ”
BernardOs warned that there would be other signs in the market before the economy grew again. “First, you’ll find that renting is much faster, and then the next step is to raise prices,” he said. However, the economist is betting that there will still be discounts for a few months. “By 2022, prices will continue to fall because we have to continue to absorb excess,” he predicts. “We see the market plummeting due to oversupply, which is a new phenomenon, and then prices will continue to rise, but much slower.”