That the coronavirus crisis has caused an inflection in the rental market is an undeniable fact. After years of increases, prices have started on a downward path in recent months. The question is how far rents have fallen and for how long. And to answer it, in the absence of official and periodic statistics in Spain, at the moment the biggest clues are provided by real estate portals. With data from the three main ones, some recently published and others advanced to EL PAÍS by Fotocasa and Pisos.com, what is clear is that rents already add up, on the average for the whole of Spain, to five consecutive months of falls.
The percentages of decline vary between some portals and others. For Idealista, rents fell 6% in May compared to the same month in 2020 and the price gap continues to widen: in April the drop was 5.5%. For Fotocasa, on the other hand, the decline in May in interannual terms (-4.5%) is lower than in April (-5.6%), which would mean that, if this trend continues in the future, prices will already have hit bottom. Pisos.com is the one that considers that rents are closer to what they marked in May 2020, with a negative difference of 2.84%.
In the comparison with a year ago, it must also be taken into account that prices are now beginning to be measured with levels already after the impact of the coronavirus, since until now they did so with months prior to the arrival of the pandemic in Spain or with the start of this, when the first state of alarm caused a paralysis of the activity that, according to the experts, also practically froze prices because houses were hardly rented. It was with the first de-escalation and the reactivation of the market that the downward trend was most clearly observed.
This started in the big cities, which means that Madrid and Barcelona have already linked together almost a full year of rent reductions. As a result of accumulation, prices in Barcelona, where the pandemic situation is compounded by a rent control law that the Catalan Parliament approved last September, already fall between 14.7% and 17.8% according to the source look at it. In Madrid, at least 12.5% do so. Fotocasa and Idealista agree that prices still do not rebound in the main cities: flats continue to get cheaper every month. Pisos.com does point to a monthly rise in the capital, which does not prevent it from scoring the largest year-on-year drop.
Falls in other big cities
In the rest of Spanish cities with more than half a million inhabitants, the situation is uneven. For Idealista, Valencia is the only one where rents have hit the ground and became more expensive in May compared to April, which does not prevent prices from continuing more than 7% below what they marked a year ago. For Fotocasa, Seville, Zaragoza and Malaga are also in that situation. Whereas Pisos.com only sees Valencia, Seville and Zaragoza in this situation.
Yes, there is a relative coincidence that Zaragoza and Valencia, the two cheapest among the six largest local markets, are also the cities where rents hold up best in year-on-year terms. In the case of the Aragonese capital, Idealista and Fotocasa place it very close to returning to price growth.
Mercedes Blanco, director of the Fincas Blanco real estate agency, points to a cocktail of factors that explain the fall of the big cities, such as the passage of many tourist rentals to the residential market, the lower demand for student flats, the poor economic situation of many tenants or some transfers from cities to metropolitan areas. “Demand has dropped and, as there is a greater supply, only the flats with the best value for money are rented,” he sums up.
In other words, tenants now have more strength to lower the rent when negotiating with the owners – it is important to point out that the figures offered by the portals are for sale and do not include the result of that negotiation, often downward – because they are They risk not renting the house if they do not adjust the price well. Blanco points out that his own intermediate real estate company currently has about 15 rentals in Barcelona and its metropolitan area, less than before the start of the crisis. However, the expert believes that “when everything is normalized with the vaccine, it will return to previous levels of demand.”
Carlos Martín, head of the Economic Cabinet of CC OO, agrees with her, who points out that rents are experiencing “a temporary devaluation, but insufficient.” The reason, he points out, is that the negotiation between tenants and owners does not work as in other areas because “housing is a basic good and the market does not work.” “Faced with a basic and immediate need, you have owners who do not have a need for immediate income to support themselves,” abounds in line with a study presented by the union in February. That for the expert means that prices have not fallen as much as they should in view of the severity of the crisis. And it will cause that with the economic improvement, they rise again.