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Is it Better to Buy or Rent a Home?

The rise in rental prices, which have increased by more than 50% on average since the lows of 2013, now exceeds the appreciation in house prices, which stands at 36.2%, placing the rental effort rate at close to 30%, in line with that of the purchase rate.

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Illustration by MJGraphic.

It’s the million-dollar question, which used to be answered much more easily when purchase prices and mortgage repayments were much higher than rental prices. However, recent increases in rental prices, especially in Madrid, (during the three months to March, prices increased by 5.15% year-on-year in Spain and by 3.03% compared to the previous quarter, according to the Brains RE real estate big data platform) make the purchase option more appealing. But … what is the most attractive formula at the moment?

In the first place, the main obstacle to buying continues to be the savings of 30% of the property value, which are required to purchase a home. In addition to that figure, which will not be financed by the banks in most cases, we must add between 10% and 20% extra for the associated taxes and notary expenses. Such amounts immediately exclude many young people from the purchase market.


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