Rental prices “out of control”

Rental prices are still out of control in Spain. In more than half of the country the cost of renting a home exceeds the maximum price of the real estate bubble. This has happened in 14 autonomous communities so far in 2023. Only Aragon and Castilla-La Mancha are viable. In addition, 38 provincial capitals have reached maximums at some point in the year and 26 of them do so in the month of June.

During this 2023, details the Fotocasa Real Estate Index for the first semester, 14 autonomous communities have exceeded the maximum historical rental price and two more have done so during 2022. “This means that in 16 communities the maximum prices reached in the years of the real estate bubble”, affirms the portal, which states that only Aragon and Castilla-La Mancha have not reached these figures.

In the case of Spain, the national average reached its maximum in April 2023, reaching €11.69/m2 per month. Compared to the month of June, the price has moderated by -0.7% compared to the maximum, reaching €11.61/m2 per month.

“The rental market continues at all-time highs and with record prices, in most autonomous regions and in practically all provincial capitals,” says María Matos, Director of Studies at Fotocasa. As she explains, “leasing is experiencing an alarming situation of price crisis, there are some communities that are 30%, 40% or 60% above the price shown during the 2007 bubble and the trend continues to be upward”.

Among the reasons for this increase, Matos continues in a note, “is that the rental demand has resurfaced so quickly that the market is not giving time to absorb it, as well as the decrease in supply and the availability of stock in rent, which has been reduced very significantly in the last year”. “This aspect causes an even more accentuated gap between supply and demand that makes rental housing very significantly more expensive,” she points out.

Last June, the Balearic Islands, the Canary Islands, Cantabria, Castilla y León, Catalonia, the Valencian Community, Extremadura, Galicia, Madrid, the Basque Country and Murcia reached the maximum price in the rental market. For their part, Andalusia and Navarra registered maximums in May, while La Rioja did so in June 2022 and in the case of Asturias it was reached in August 2022.

In the case of the two communities that have not reached the maximum prices “it is not expected that they will do so in the coming months and even with the moderation of the rental price that we are observing in recent months, it is possible that they will not exceed the maximums”. Thus, in Castilla-La Mancha it is currently -14.8% below the maximum price that was reached in November 2007 with €7.24/m2 per month, and in the case of Aragon, the price is -17.7% below the maximum that was in June 2008 with €10.85/m2 per month.

Regarding the provincial capitals, in 38 of them they have reached the maximum price at some point in 2023 and 23 of them have done so during the month of June. In addition, seven provincial capitals also reached highs compared to the real estate boom years.

Thus, only three provincial capitals are yet to reach maximums. These are Ciudad Real, which is -14.5% below the price registered in June 2008, followed by Zaragoza, which is -14.2% below the maximum price of May 2008, and Guadalajara, which is -8.8% below the price reached in February 2008.