The average price of rental homes in Spain during the first quarter of 2020 amounted to 10.2 euros per square metre per month, whilst the average monthly cost stood at 1,098 euros. Of the ‘Top 25’ municipalities, those with the largest populations, in Spain, rental prices were above average in just six, specifically in Barcelona, Madrid, Bilbao, Badalona, Hospitalet de Llobregat and Palma, according to data from the Brains RE real estate big data platform.
The cities with the highest average rental prices during the first three months of the year were Barcelona, at 17.6 euros per square metre per month, and Madrid, at 15.8 euros per square metre per month. They were outperformed or matched only by municipalities outside of the ‘Top 25’, such as Ibiza, San José, San Antonio Abad and Santa Eulalia del Rio, all on the island of Ibiza. By contrast, Elche, Cartagena and Murcia recorded the lowest rental prices, of between 5.5 and 6.3 euros per square metre per month.
In terms of the monthly rental amount, only three of the Top 25 municipalities exceeded the Spanish average. Barcelona led the ‘Top 25’ with an average price of 1,595 euros per month; whilst rents in Madrid stood at 1,548 euros per month and in Palma at 1,309 euros per month.
Rents in other municipalities on the outskirts of Barcelona, such as Hospitalet de Llobregat and Badalona, exceeded 1,000 euros per month. The municipalities that recorded the lowest rental prices during the first quarter of the year -of less than 650 euros per month- were Oviedo, Gijón, Cartagena and Murcia.
The most offered rental property in most municipalities were two-bedroom apartments. During the first quarter of 2020, the average price for this type of home in Spain was 11.7 euros per square metre per month, equivalent to a monthly rental cost of 936 euros. The municipalities that topped that list were, again, Barcelona, with an average price of 1,413 euros per month; Madrid, 1,383 euros per month; and Palma, 1,134 euros per month.
At the opposite end of the spectrum, the most affordable municipalities for renting a two-bedroom apartment during the first quarter of 2020 were Cartagena, with an average rental price of 566 euros per month; Oviedo, with an average of 553 euros per month; and Elche, with an average of 542 euros per month, according to data from Brains RE.
Valencia, where prices rose by the most
During the three months to March, prices increased by 5.15% in interannual terms in Spain and by 3.03% compared to the previous quarter. Over the last year, the Top 25 municipalities all saw positive growth in their rental prices and the one that registered the greatest increase was Valencia, with growth of 11% compared to 2019.
Hospitalet de Llobregat followed at a similar pace, with a 9.2% rise in rental prices, and then Bilbao, up by 8.7%. By contrast, Cartagena was the municipality that had the lowest growth in rental prices, with 0.3%. It was followed by Oviedo, with an increase of 0.6%, and Palma, with an increase of 1.4%.
In terms of growth in the last quarter, seven of the Top 25 municipalities registered negative growth in rental prices compared to the end of 2019. “Hospitalet de Llobregat, A Coruña, Elche, Tarrasa, Málaga, Gijón and Badalona saw a slight drop in their rental prices, of between 0.1 to 1.2% “, explains Laura López, Data Scientist at Brains RE.
2- and 3-bedroom flats, the largest supply
In the Spanish rental market, multi-family homes accounted for 88% of the total supply, with the dominant product being 2 and 3-bedroom apartments; they represented 58% of the rental market in Spain during the first quarter of the year.
In the ‘Top 25’ Spanish municipalities, multi-family homes accounted for a market share of between 98.8% and 99.7% of the available properties for rent in Bilbao, A Coruña, Hospitalet de Llobregat and Valencia, with the supply of single-family homes being almost non-existent.
Meanwhile, the only municipalities below the Spanish average in this regard were Elche, where multi-family rental homes accounted for 87.1% of the total supply, and Cartagena with 87.3%.
In terms of yields, during the first quarter of 2020 in Spain, the gross yield of rental homes stood at 6.81% for multi-family properties and 5.61% for single-family units. The average overall gross yield was 6.93%.
The 25 municipalities with the largest populations were below the average for Spain in terms of rental yields. “That is because they are consolidated locations, where demand is high, making them attractive areas for investors,” says the Data Scientist.
The municipalities that recorded the highest yields were Tarrasa and Hospitalet de Llobregat, both with 6.5%. They were followed by Las Palmas de Gran Canaria, where the average yield was 6.3%. Conversely, Palma, Barcelona and A Coruña registered the lowest rates of return, of less than 4.5%.
The average publication period – the amount of time that a property spends on the market until a tenant is found – for rental homes was 1.8 months in Spain during the first quarter of 2020.
Multi-family homes were the most liquid product since they were rented within 1.7 months, on average, whilst it took 2.3 months to rent the typical single-family home. “The bigger a house and the more bedrooms it has -and therefore the more expensive it is -, the longer it takes to find a suitable tenant,” says Laura López.
Of the ‘top 25’ Spanish municipalities, only seven recorded shorter publication periods than the average for Spain. Cataluña saw the most liquid markets with shorter publication periods than elsewhere: Hospitalet, Sabadell, Terrassa and Badalona recorded average publication periods of between 1.1 and 1.4 months.
They were followed by Madrid, with 1.5 months, and Barcelona, with 1.6 months. The municipalities where it took the longest to find a tenant were Oviedo, where the average stood at 2.4 months, and Valladolid and Córdoba, both with 2.2 months.
Structure of the rental market
12.3% of the properties on the market in Spain during the first three months of the year was rental homes; whilst homes for sale – with longer publication periods – accounted for 87.7% of the supply, according to data from Brains RE.
The municipalities that had the largest supply of rental housing during the first three months of the year were Barcelona, where rental homes represented 42% of the total; Madrid, with 35%; and Las Palmas de Gran Canaria, with 28%. On the contrary, the municipalities where rental properties had the least presence were Vitoria-Gasteiz, with 5%; Sabadell, with 8%; and Córdoba, with 9%.
In terms of the management of rental assets, on average across Spain, 79.3% of properties were in the hands of estate agents. All of the Top 25 municipalities, except Vitoria-Gasteiz, had a higher degree of professionalisation than the Spanish average.
The markets that had the highest percentage of rental homes in the hands of professionals were Barcelona, with 94.1%; Tarrasa, with 93.5%; and Bilbao, with 93.5%. Meanwhile, the municipalities with the most properties in the hands of individuals were Vitoria-Gasteiz, where just 77.5% of homes were marketed by estate agents; followed by Valladolid, with 83.9%; and Las Palmas de Gran Canaria, with 84.8%.