Rents fall in Spain for the first time since the Great Recession

A woman walks past a real estate agency with advertisements for homes for sale and for rent, on June 30 in Madrid.

Lowering the price of rents is no longer a phenomenon exclusive to the big city.

The average amount of rents in Spain declines or stagnates in the records of the main real estate portals for the first time in years.

The coronavirus crisis in January cut a streak of uninterrupted growth since July 2015, according to Fotocasa, and from a year earlier, June 2014, for Idealista.

Meanwhile, in large cities, leases do not find a fund.

Real estate portals began to register falls in rents in the main cities in the early stages of the pandemic.

Month by month, the rents got cheaper and that began to be reflected in the national average as well.

This, however, resisted in year-on-year terms, that is, the rents of a certain month were still higher than those of the same month of the previous year.

This trend has been broken in 2021: the average of 11 euros per square meter that, according to Idealista, was requested for a rental in Spain last January is 0.1% less than 12 months earlier.

It is not a big drop, but it is very significant: it had not happened since June 2014.

Data provided by Fotocasa and Pisos.com to EL PAÍS reflect the same trend in their statistics.

For Fotocasa, in January the average Spanish income stagnated (0%), after growing continuously for 65 months.

Pisos.com is the one that collects the largest drop, 1.8% in year-on-year terms, although that portal already pointed to a slight decrease of 0.1% in November.

The January data represents an inflection with respect to December in all three cases, when there was a coincidence that average incomes ended 2020 higher than they started, despite the pandemic.

It should be considered that the portals collect the sale prices (what the landlords ask for) and not the price at which the contracts are closed.

That is why the economist Gonzalo Bernardos, director of a real estate master's degree at the University of Barcelona, ​​points out that “they reflect upward trends better than downward trends” and believes that real prices possibly began to fall months ago.

Among the causes, Bernardos fundamentally points to an “oversupply”.

According to a recent study by Casafari, a platform that manages a large property database focused on professionals and companies in the sector, the number of houses available for rent in Spain shot up 178% last year.

The authors of the report directly point to the transfer of tourist homes to traditional rental as the main reason.

Along with this phenomenon, that of tourist flats that in large cities and coastal areas seek alternatives to the lack of travelers, there are others also derived from the economic difficulties of families.

“If you suddenly find yourself in an ERTE [temporary dismissal], you see that you have to pay less,” says Lázaro Cubero, Director of Analysis at Grupo Tecnocasa.

"Many people left the house where it was to look for a cheaper one, we already detected a movement for this reason in some cities during the first confinement," he explains.

To all this are added removals in search of larger flats, for needs such as those derived from teleworking.

"These are people who want to pay the same, but with more meters," says Cubero.

This also translates into lower average incomes and both experts believe that it is consistent with the movement shown by the portals, where rents in large cities began to fall earlier, which receive more tourists and more trips for work or study reasons. .

Big drops

That is the reason why Bernardos points out that, in the long run, "in small cities the rent will not drop that much."

"In an average capital, the income differences are equal to 30%, but in Barcelona or Madrid it is very high, there is still 200% between the most expensive and the cheapest areas."

In short, more downward travel in two cities than for the economist "have the largest oversupply of rental housing since the arrival of Democracy."

The data from the portals in January show precisely that the bleeding of prices does not stop in cities with more than half a million inhabitants.

In Barcelona, ​​the three agree that the collapse is in two digits compared to the amounts of 12 months ago.

In Madrid, which also accumulates setbacks month after month since mid-2020, the flats are already worth 8.6% less than a year earlier according to Idealista, which gives them a smaller drop.

The biggest collapse of all those registered is the one from Pisos.com to Seville (-14.78%).

In short, all the statistics point to strong setbacks from which not even Zaragoza, which is the one that is best portrayed, appears in all three cases.

Compared to December, houses fell in price in all large cities, with the sole exception of the Fotocasa data for Valencia, which gives a slight monthly increase of 0.1%;

although that does not prevent that, in interannual terms, houses are 7.4% cheaper, according to the same source.

Zaragoza and Valencia, in addition to being the ones that fall the least, are also the ones with the cheapest average incomes, something in which there is also synchrony between the portals.

The fact that the falls continue to accelerate in the metropolis shows that there is still a journey through the desert for a while, experts say.

"This year the economic issue is not going to be solved, hopefully the sanitary will be solved, and logic indicates that the downward trend will continue," says Cubero.

"There is very little chance of the opposite happening and from there, if all goes well, the descent will begin to slow down," he adds.

However, the Tecnocasa analyst also points out that the recovery will be reflected earlier in leases than in sales prices, as has also happened with the hit of the coronavirus crisis: “The rent is more agile and these trends are seen earlier.

If someone decides that they want to change house, they change in two months ”.

Bernardos warns that, before growing again, the market will show other signs.

"First you will see how much faster renting is much faster and then, the next step will be to increase prices," he describes.

However, the economist bets that there are discounts for months.

"In 2022 the price will continue to fall because it will be necessary to continue absorbing the excess," he predicts, "we have observed a plummeting market drop due to excess supply, which is a novelty, and then a price rise will follow, but much more slowly ”.