The rental housing in Spain has become the most profitable asset for any investor who wants to get the most out of your capital. With interest rates in negative and the Bags in red by uncertainty about a slowing economic front, the results offered by the financial assets to the investors are flat or negative, against the alternative real estate that multiply this return several times, according to data released last Wednesday by the Bank of Spain in its latest report on the housing market.
The difference between the payoffs averages obtained with rental properties, or financial assets as the public debt or equity leaves no doubt about why the real estate market concentrated from two years ago, the interest of small, medium and large national and international investors.
And if one takes into account that the prices of rental or purchase on certain capital evolve so disparate to the purchasing power of households. Wages grow as the average, six times less (0.7 per cent) that the rents and the effort required to finance the purchase of homes increases both in wealth that need to be allocated (32% of your gross income in the first year) as in the years that intended to finish paying them off in these conditions (of 23.3 years compared to 22.8 in 2015).
According to the Bank of Spain, the gross return gained by the rents of housing in the last 12 months arrives already at 4%, that is, three times more than what he can provide a model investment in fixed income securities such as government bonds of 10 years, which was 1.5% at the end of the last quarter.
If what you look is an alternative as deposits to between one and two years offered by banks, the data of the agency supervisor indicates that the comparison is even more favorable to the rent because, due to the policy marked by the European Central Bank, just add a 0.1%. The Spanish Stock market, which suffers from a high volatility on account of protectionism or second-guessing as the Brexit, gave a negative returns of 9.6% up to September. Except for Italy, in other european markets, the picture is similar; but Spain is, together with Holland, the country where more obvious become the differences of returns for investors.
Clear that the gross return on rental is to estimate only a part of what you can offer the house today to investors. When the Bank of Spain taking as a reference the growth of the income from rental plus capital gains retained by the housing in the past 12 months, the average return shoots up to 10.9%, that is 7.5 times more than the letters, 110 times more than the deposits and profits compared to losses of the purchase of shares.
“The average price of rent continues to rise in Spain and is situated in 8,22 euros per square meter,” explains Beatriz Toribio, head of Studies of Fotocasa, one of the sources of the Bank of Spain to develop its follow-up report. Toribio highlights that the rate of growth has fallen compared to last year, when we recorded increases year-on-year in two digits. “Even so, our data reveal strong tensions in prices in the main capitals of the country, which is striking, especially taking into account that a good part of them we have already exceeded the peak prices of 2007 and 2008”.
According to Fotocasa, the rents in Spain have risen virtually uninterrupted over the past four years. Madrid is the community more expensive to rent a second-hand housing, with an average price of 12,92 euros/m2 per month. He continues to Catalonia (12,09), Basque Country (9,76) and the Balearic islands (9,66). On the opposite side, Extremadura (4,63) and Castilla-La Mancha (5,01) are the two regions with the price of the rental dwelling, more to the scope of the demand.
Rent by communities and price
The statistical averages hide large differences between real estate, basically for its location. The financial assets are also much more liquid than homes. In any case, there is no doubt of interest for the rental market as an alternative investment that is competitive with the most financial. About a third of the sales and purchases of houses are made without financing. “While interest rates remain negative, real estate will remain an attractive extra,” explains Susana de la Riva, head of Marketing for Tinsa.
Barcelona is, by far, the most expensive city to rent an apartment. A study of 60 square metres is rented by the 964 euros per month, a figure higher than the new minimum wage prescribed by the Government. A house of 95 sqm, as are the reference indicators of the Bank of Spain, required an income of 1,600. Madrid, and Gavá and Sitges, in the province of Barcelona, are the municipalities that follow to the Catalan capital in more expensive prices.
Control of prices in the next act
The Government is expected to approve by decree in the next few weeks the Hire Act Urban, with the who has warned that it will limit any price rises in certain areas. According to sources knowledgeable of the process of elaboration of this text, the initial project was to offer tax incentives to property owners that set-aside of housing for groups with difficulties of access. Now, Finance and Economics should review the document created by the Promotion. But the problem of housing is one of the pennants hitch we Can, which requires the control of prices at the point 3 of your budgetary pact of October with the Government. The measure may have a major impact on the growing tourist rental, in the platforms like Airbnb have revolutionised the center of the cities. Funds such as BlackStone or Cerberus, who have bought the greater part of the assets sold by Santander, BBVA, CaixaBank or Sabadell, have already warned the Ministry of Economy: restrictive regulation could stifle the development of more park homes for rent.
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