A few months ago, Pelayo and Carla had stopped actively looking for an apartment. Discouraged by prices and rising interest rates, the couple decided to continue renting. From that failed process there were some notifications on the mobile phone and the habit of entering, from time to time, a real estate portal. At the edge of the end of summer, while browsing through Idealista, an advertisement appeared for a house that they could envision as a home in which to continue their life project. “We called and they told us that if we wanted to see it it had to be that same afternoon, in an hour and a half,” he remembers.
They attended the meeting, in a process that ended up being against the clock. “During the visit they told us that there were already three other people interested: one wanted the apartment to live in and the others were investors, one foreign and another national who could send them the money the next day and who wanted it only because he knew that the prices in the area they would rise,” recalls Pelayo. After 40 minutes, the couple convinced the owner, a private individual, to give them a few days of margin “to crunch the numbers.” In just three days they had to make one of the most important decisions, in economic terms, of their lives.
The case of Pelayo and Carla (not their fictitious names), aged 35 and 32, shows a barrier to access to housing, even for those families and young people who can overcome the financial burden. “Our problem is that having savings that are not bad and good salaries, we compete with people who want apartments to invest,” they lament. In 2023, 56.2% of home purchase and sale operations in Spain were carried out without a mortgage, almost six points more than the previous year and the highest rate since 2015.
After the burst of the real estate bubble in 2008, the Spanish real estate market underwent a momentous change. “The decision to restrict credit to preserve the financial system greatly limited who could take out a mortgage to buy a home,” explains the director of the Housing area of the Urban Research Institute (IDRA), Jaime Palomera, co-author of the study.From owners to tenants. Report on growing inequality in access to property’. Since citizens need to live under a roof, the consequence of purchasing prices going down is that rent goes up. “You have the entire low-income population, who in many cases suffered the consequences of the great recession, and all the young and not so young people who become emancipated but cannot buy, so a very important business is opened,” says the researcher.
This situation, accompanied by favorable tax policies, has caused multi-owners to increase in all segments. “The population that already had properties are, in general, the highest income strata, who tend to have lower housing costs and, in turn, rental homes. This allows them to have a greater savings capacity and more income, both from work income and real estate, and to acquire more homes,” analyzes Palomera. “It is a slow process, but it generates a gradual increase in large owners.” In Barcelona, for example, one in four homes is in the hands of a person, natural or legal, with at least eight properties.
As can be seen in the following graph, the total number of homes purchased each year by companies has remained more or less stable in the last decade. In 2023 there were 63,127, almost 11% of the total operations executed in that year. “The aggregate data of the joint market has not increased significantly, but we have to go to the case of metropolitan area X or province Y. There is a problem of population concentration in certain urban groups, such as Madrid, Barcelona, Valencia or Bilbao, which has “The price has become very expensive,” says Marina Asensio, an economist at the consulting firm Afi and a native of Malaga, where “young people compete with people who want to buy housing and put it into tourist use or with foreigners with better salaries who want to retire” in the area.
Alejandro, who is 34 years old and is looking for an apartment to buy and become emancipated, after saving for years in his parents’ house, was surprised the first time he was asked if he needed to take out a mortgage. “Who doesn’t need a mortgage to buy a flat?” he asked incredulously. In the absence of a greater breakdown of the public data, the previous visualizations show that more than half of home purchases were made without a mortgage and that, of the total, 89% were purchased by individuals.
Alejandro’s question is answered by the experts. “People who accumulate great liquidity. Spain is a country of large owners, in which a high percentage of people have a second home. Or people who inherit: every day someone dies and whoever dies now has a fairly high accumulated wealth, because they had access to housing,” Asensio lists. A study of his authorship, Demographics, housing and wealth gapspublished this Wednesday by the Afi Emilio Ontiveros Foundation, corroborates that “while the oldest cohorts have recurrently maintained a primary home ownership of more than 80%, while systematically increasing the ownership of other real estate properties to levels close to 60% %, the younger cohorts recorded a drastic decrease in primary home ownership, from levels close to 70% at the beginning of the century, or in the midst of the financial and real estate crisis, to just 32% in 2022.
The economist and researcher at KSNET, Pablo Tucat, adds another actor to this group: “Foreign individuals with high purchasing power, who also make cash purchases, especially in coastal areas.”
In the group of people who buy in cash there are also multi-owners who manage their properties without setting up a company or company, which are not few. The latest statistic detailed personal income tax (Personal Income Tax), with data from 2022, shows that one in five filers with an income of between 30,000 and 60,000 euros gross per year has an average income of almost 800 euros per month from renting properties that, Furthermore, they rise among the richest.
The entry into the market of actors who see housing as an investment and not as a place to live has caused, in Palomera’s opinion, two clear effects. The first is inflationary. “Until a few months ago, there has been a drop in mortgage concessions, so while real demand (for living) was falling, prices continued to rise and, in some places (Madrid and the Balearic Islands), even exceeded those of the bubble” , indicates the researcher, who points out that “if there were not all that demand for housing as an asset, there would not be this permanent overheating effect.”
The second effect is less measurable, but it is also evident and has to do with greater pressure on individual buyers looking for their first home. “I’ve been searching for months and the apartments are flying. You don’t have time to reflect and I’m afraid that, when I find something I like, I won’t be able to opt for it because of the rush,” Alejandro laments. Pelayo and Carla have already overcome that stage, but they describe a scenario of extreme pressure. “We had three days to do the math, calculating how much money we had, how much our parents could lend us, to contact a renovation company and ask for an approximate budget… And then you are overwhelmed by what everyone tells you: to ask for the minutes of the last neighborhood meetings, proof that the building has passed the technical inspection, if you have looked at the pipes… It is impossible, of course we have not looked at it. “We’ve been in the house for 40 minutes!” he remembers.
13% of ads disappear in less than a week
According to Idealista data, 13% of the homes that were published on the portal during the third quarter of this year were not advertised for even a week. The study shows that this rate is much higher in provincial capitals such as Granada (25%), Girona (22%) and Pamplona (20%). In Madrid, 18% disappear within seven days, one point more than in Barcelona.
“Families have the entry fee, but they compete with actors who do not need a mortgage, speed up the process, pay in cash and can even pay a little more. Furthermore, in many cases they practically do not even need to visit the home, because they see it as an asset, unlike a family that may need to go five or six times, because it is the most important decision in economic and emotional terms of their life,” develops Palomera.
For Tucat, the participation of legal entities in the real estate market “is not necessarily negative.” There are examples, such as Housing Associations, management models based on non-profit that operate successfully in other countries, such as Austria, Canada or Denmark and whose expansion in Spain is still minimal. “The concern arises around a specific type, which are private companies, investment funds or Socimis, which are not intrinsically bad, because they can provide benefits on a theoretical level, but which are linked to a clear symptom of commercialization. of housing, which is at the heart of many problems linked to price,” says the economist.
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