In this last year, the idea that renting a house is throwing money away has gained weight, according to Fotocasa the leading Spanish real estate portal.
The rental of housing does not end up taking root in Spain. Six out of ten tenants believe that the rents have risen so much that compensates to pay a mortgage instead, a percentage that grows up to 70% in the case of the Community of Madrid and 64% in Catalonia.
The high prices in lettings have not stopped rising since 2015 and in big cities such as Madrid or Barcelona have exceeded the maximum prices of the boom years, have made the purchase regain ground to the detriment of renting among tenants.
In addition, the idea that renting is throwing money away, which already began to haunt the head of many tenants last year, has become more prominent. If 25% of the tenants thought so in 2017, they are now 33%. Madrid (37%) and the Valencian Community (35%) have registered the highest percentages of tenants that support this idea. But this reflection has also been installed among the landlords (from 32% in 2017 to 37% today). They are data obtained from a report carried out by Fotocasa that studies rent in Spain between March of 2017 and March of 2018.
This reluctance has had the first consequences: the number of people who rent housing has fallen. In the last year, 36% fewer Spaniards have participated in the rental market. The decline has been more intense among young people aged 18 to 34, whose participation has been reduced from 29% in 2017 to 15% today. With its abandonment of the rental market there has been a decrease in demand.
Young people on top of the list
Another consequence is that young people between 18 and 24 years old are considering the possibility of buying a home. An idea that rounds almost half of the current tenants. 43% plan to become owners in the next five years, because they believe that the purchase is a good investment and 43% (36% in 2017) believes that a home is the best inheritance that can be left to children. And also because they do not trust that the situation will improve: up to 81% of them consider that rents will continue to rise and only 2% expect them to fall in price. Only one in five (21%) says that buying a house does not fit into their plans.
In addition to the high prices faced by tenants (78% say that the main difficulty for them is this, followed by the state of the houses), there is their limited ability to negotiate the rental price with the owners. Six out of ten has not achieved it in the last year. And the reduction, if it occurs, has been less than 10%.
The fact that rent has alienated the youngest has had one more consequence and is the main role that tenants of upper-middle class have acquired, with an increase of four points over the previous year.
Rent by obligation and not by devotion
Another important change from last year is that rent is no longer voluntary, but mandatory. The economic causes for rent go to occupy the first place. The rent of a house to live in it is not a voluntary option and decided by important part of the tenants (who have rented or sought to rent in the last 12 months).
When they are offered reasons why they have opted for letting, almost half of them say that their economic situation prevents them from buying a property. Labour mobility (31%) and flexibility are other frequent arguments, according to Fotocasa.
In the report presentation the director of Studies of Fotocasa has said that the fact that finally the draft of the Spanish General State Budget (PGE) of 2019 has not collected the limitation to the rental prices is “positive, since this measure implies risks. “It is true that we believe there is a problem of access to housing and that as a result of these high prices demand is contracting, but we believe that limiting prices has risks,” Toribio added, in relation to the budget pact between the PSOE and left wing party Podemos.
In this line, he pointed out that many owners could be tempted to rent in other ways and the submerged economy could re-float in this market. He also assured that the supply could also be reduced, which is the main problem facing the Spanish real estate market. Toribio has also made it clear that what Spain needs is to increase the supply of housing for rent at “affordable” prices. “We need greater public-private collaboration, although it is also true that we need a greater social housing park,” he added.