Slump in housing market also affects rental market with falls of up to 30% in cost of renting
According to figures released today by the government, there has never been a better time to rent a property in Spain. And whereas renting has never been a particularly attractive option for young Spaniards who have always tended to stay at home until they have enough money to put a payment down on a property and get a mortgage, with the current fall in the value of property in Spain, more and more people are considering the option of renting. And, luckily for them, rental prices are currently lower in many capitals of provinces than 12 months ago.
According to the Ministry for Housing the cost of private housing has fallen by 8.2% compared to the first quarter of 2008. A recent study by Idealista shows that during the first 6 months of 2009 rental prices fell compared to a year ago with rental prices in Madrid 8.4% cheaper, 11.7% cheaper in Barcelona and almost 30% cheaper in Zaragoza.
The study by Idealista suggests that the ‘rental market reacts more quickly and better than the housing market to changes in the cycle’ and that the fall in the price of buying a property is countered by property owners who are less likely to drop prices or sell during a slump in the housing market. However this is not the case for the rental market as property owners do not mind dropping prices as they know they are going to maintain ownership of their property.
Furthermore rental prices are more likely to fall because they are more affected by household income, and unemployment in Spain currently standing at 1.5 million, there is more need for prices to adjust to demand.