Rental market moved first half year 2021 and what can happen in the second half, according to real estate experts - The rental market in Spain has confirmed during 2021 the forecasts of the main analysts of the real estate sector and is registering since the beginning of a decline in its prices that is more pronounced precisely in large capitals, such as Madrid or Barcelona, despite the fact that these cities and other stressed markets accumulated almost 3 consecutive years of increase in prices.

Thus, several real estate portals have detected a decrease in rental income in much of the country since the beginning of 2021, a trend that already began to manifest itself at the end of 2020 in several cities throughout the country as a result of the paralysis of the market for several months during the coronavirus pandemic, which has affected in an opposite way the sale and rental of homes.

"They are behaving in a quite different way the rent and the sale, if we are going to sale we are seeing how, especially since the beginning of the year, at year-on-year level there are no falls at the state level since summer of last year", assures Ferran Font, director of Studies of Pisos.com, highlighting that sales prices are recovering while rental prices continue to fall.

"For several months now, prices have been falling in those markets that are more stressed, in those markets where housing accessibility was more complex because of the difference in the evolution of rental income compared to the evolution of wages, especially for the younger generations, who have access to more modest wages," explains Font.

However, the director of Pisos.com he points out that the market remains fragmented. "In the main capitals the falls are very important from the end of last summer, we started autumn with very important falls in Barcelona capital, Madrid, Malaga or Valencia, which are around 15% year-on-year, very relevant, and nationally we do see how it begins to fall from the beginning of the year, although they are more moderate falls”.

Rental market moved first half year 2021

María Matos, Director of Studies at Fotocasa, agrees to point out the decline in rental prices since the beginning of the year and points out that this trend has increased in recent months. "Our rental price index began to detect falls last February 2021, of -1.7%, and have been intensifying month by month until this June the price falls -3.5% compared to June 2020," Matos told.

In addition, it also highlights the differentiated behavior of Madrid and Barcelona with respect to the rest of the country. "In cities like Madrid or Barcelona prices are falling at a rate of -11% after many years of intense rises. Therefore, the current price regulation that exists in Barcelona can not know exactly if it is having an impact since in Madrid, a city in which there is currently no price limitation, it falls at the same rate as Barcelona," he adds.

Rental market moved first half year 2021: For this reason, Maria Matos attributes the sharp drop in prices to a natural behavior of the market. "After years of intense increases and with maximum prices reached, it had to begin to fall and moderate," he says, pointing to the influence of the coronavirus and its social and economic impact on this evolution of prices although that trend was already present before.

"It is true that this moderation has been accelerated by the pandemic and the changes in the rental market for a few months, with most offering for floors vacation, less demand for students who do not rented... but he was already an expected behavior in a scenario without a pandemic, highlights the director of Studies of Fotocasa.

Meanwhile, CBRE calculates that in its latest report on the residential market that the average rental price grew by 56% in Spain between 2013 and 2020. However, despite the increases have been widespread in the past 7 years, the study revealed that in Barcelona rebounded 48%, and in Madrid a 43 per cent, while in Valencia and Palma de Mallorca grew 53% and 56%, respectively, while in Bilbao or Cáceres rebounded below 20%.

Rental market moved first half year 2021

Regarding the first months of 2021, Samuel Población, national director of Residential and Land of CBRE Spain, highlights the most marked downward trend in large capitals. "In the first quarter of 2021, a slight downward adjustment in income was observed, of -2%, reaching 11 euros per square meter per month nationally. This fall occurs more sharply in Barcelona and Madrid, " he says, explaining that in Barcelona they fell by 14% and in the capital by 10%.

For his part, Iñaki Unsain, real estate personal shopper and president of the Spanish Association of Real Estate Personal Shopper (AEPSI), also notes this trend. "Rents have fallen significantly, they fell by 10%, 12% or 13% in Barcelona, logically because the pandemic has paralyzed movements due to the lack of mobility and a major crisis," he says.

Rental market moved first half year 2021: In addition, Unsain says that the impact of the coronavirus has affected the entire rental market, both in homes that already had tenants and in those that were still in the market. "Those who were already rented asked for price reductions and the empty flats have cost a lot to rent because there were no tourists, there was no foreign mobility," he explains.

"The supply has increased a lot because tourist apartments, in the absence of demand, have repositioned them to temporary rent of less than a year or to conventional rent of up to 5 years," says the real estate personal shopper, who considers that the fall in prices is the logical consequence of the increase in supply and the decrease in demand that has caused the coronavirus.

From Idealista, they say that the average rental price fell by 5.6% in June compared to the previous year and 0.6% compared to the end of the first quarter of 2021, although they agree with the rest of real estate experts in pointing out that the biggest rental prices are occurring in large cities, with a decline of 13.2% in Barcelona, 12.4% in Madrid, 8.5% in Palma de Mallorca, 8.1% in Malaga and 7.6% in Seville.

Rental market moved first half year 2021

Its spokesman, Francisco Iñareta, points out that the factor that is most influencing the evolution of prices is the size of the housing stock available for rent. "During the pandemic we have realized that stock is the factor that most directly influences rental prices, so we will have to be aware of how it evolves in the coming months to know what can happen with rents," he says.

Regarding the evolution that could follow the prices of rental homes in the second half that has just begun, most experts consider that they are likely to continue to be cheaper, although more moderately than during the first half of the year due to the progressive return to normal after the coronavirus pandemic and its impact on the sector.

"Our perspective for the second half of the year is that the price will continue to fall, although they will not be very steep falls," says María Matos. "In addition, the demand for rental housing remains strong and this will cause prices to fluctuate according to supply and demand," he adds, stressing that his reports continue to detect a widespread cheaper lease.

Rental market moved first half year 2021: For its part, Iñaki Unsain foresees a general increase, both in rental prices and in the number of purchases of housing and its value in the market. "For the remainder of 2021, I believe that prices will be corrected upwards, in the same way that the level of vaccination will increase and, therefore, the level of mobility and the return of students, tourists and foreign executives will be increased by 2022," says the president of AEPSI.

Meanwhile, Samuel Población says that the results of the first quarter anticipate a growth trend in demand and investment interest. ” The percentage of homes in rental regime is expected to increase to 27.3% in 2024, which will boost the demand for residential investment in the coming years", according to the head in Spain of CBRE, who expects rent to increase over the next 2 years after a short-term crisis.

In addition, the latest report from property consultancy highlights the importance of the new regulations to control rent prices, noting that the government has chosen a policy of tax incentives in place a regulatory policy and the regional Government of Catalonia as applied to a law of rent control, although accurate that some of its articles have been considered unconstitutional.

Rental market moved first half year 2021

"An alternative to the regulatory policies that will guarantee new rental housing at affordable prices are the public-private collaboration proposals launched in Madrid and Barcelona," says the CBRE study in reference to the Madrid community's Vive Plan, approved in January, and the Habitatge Metròpolis project of the city council of the Catalan capital.

While, Idealistic, has criticized the rules of regulation of rents Catalan, that takes 9 months into force, noting that demand has increased in Barcelona by the effect called rent cheaper to almost 30%, while in Madrid declined 0.3%, while it has been estimated that the supply of rental housing has been reduced by 21.2% from the past month of September, while in the Spanish capital grew by 2%.

Rental market moved first half year 2021: “The question is whether this type of regulation or not at the right time", stresses Ferran Font, which considers the difficult access to the car causes so much damage to the real estate sector and society in general to postpone the emancipation of the youngest and precarizar even more families with fewer resources, which ensures that they are the ones who suffer most from the impact of the rising cost of housing.

"In Spain there is a problem of accessibility to the rental dwelling, and is a consequence not only of the evolution of the income from the rental, but also of the evolution of wages and how the lowest wages have not evolved since the bursting of the housing bubble, as are those sectors of the population that have been most affected by the insecurity, the temporality and low wages," explains the director of Studies Pisos.com.

For this reason, Font does not consider the regulation or freezing of rental prices a positive measure to solve this problem, since it ensures that the experiences in Paris, Berlin and several US cities have not worked. "Not only have they not managed to lower the rent, but in some cases they have managed to make the available rental park smaller, in other cases the underground economy has appeared and in other markets the rental park has degraded," he explains.

Rental market moved first half year 2021

On the other hand, Ferran Font does see positive government proposals that are aimed at increasing the supply of rental housing. "They are above all those that are aimed at generating greater supply of the housing stock and this supply has to be free market housing stock, affordable price and official protection. Only by increasing this type of housing stock will it be possible for rents to be decoupled and that happens through public-private collaboration," he adds.

As an example of the effectiveness of these measures, Font highlights the case of Vienna, noting that over 60% of its population live in housing owned public managed through the public-private partnership, which notes that it has led to an increase in the housing stock and organize their management to have an impact on prices.

"The housing policy of Vienna is exemplary from different points of view, since it is a long-term housing policy that does not take into account elections or party options of any kind, but is a long-term housing policy of the country, and needs a very determined investment," says Ferran Font, explaining that the annual budget of Vienna in housing management is 600 million euros, of which half is destined to build and the other half to rehabilitate.

# Rental market moved first half year 2021 #