Just a week or two after the declaration of the State of Emergency, the residential markets of Madrid and Barcelona have begun to transform, with the emergence of almost 100,000 new homes for rent in both cities, according to data from the Brains RE big data real estate platform.
“After the State of Emergency was declared, the rental market was partially paralysed for several weeks, with the closure of real estate offices and agencies. Moreover, clients were prohibited from visiting properties. During the first two weeks of confinement, the data shows a drop in the number of published assets caused by the sudden closure of real estate agencies and the exceptional nature of the uncertain scenario, both in Madrid and Barcelona,” says Antonio Ramudo, Data Scientist from Brains RE.
“After overcoming the initial scare, the rental market remained frozen for several weeks until the start of Phase 0 on 4 May. It was then, with the opening up of the real estate agencies, that property portals began to register a significant increase in rental properties, although two weeks earlier, slight increases in stock were also perceived. Then, last week, the supply of rental properties reached an annual maximum with almost 48,000 homes on the market in each of the two largest cities in the country”, he adds.
The supply has been growing week after week
In this way, after the outbreak of the pandemic and the declaration of the State of Emergency, the supply available in the Spanish residential market has been seeing an increase in terms of rental properties week after week, whilst the weight of homes for sale has been decreasing.
According to data from the Brains RE real estate big data platform, of the total residential properties on the market in Madrid, rental housing accounted for less than 28% until 14 March.
After a couple of weeks, that market share began to increase week by week, to reach 37% of the total supply on the market today, up by more than 9% compared to the week that lockdown began.
The same thing has happened in Barcelona, where the market share of rental properties ranged between 33% and 35% before the State of Emergency was decreed, and currently accounts for 42%, according to data from Brains RE.
“A priori, it could be that the labour and economic uncertainty of many people in Madrid and Barcelona have caused a possible contraction in demand over the last few weeks and, therefore, an oversupply due to a lower volume of contracts signed, but if we look at the number of assets that are being removed from the portals (which we could interpret as properties being rented), we see that they are growing at a similar rate to the supply, so it does not appear to be a significant reason,” explains Antonio Ramudo, Data Scientist at Brains RE. He also points to another phenomenon to explain this increase: the conversion of tourist housing into regular rental properties.
“With national borders closed, tourism on hold and the prohibition of movement between provinces, the owners of vacation homes are looking to traditional rentals as a refuge from the crisis. You only have to take a quick look at any of the main real estate portals in the country to find a multitude of properties with the usual characteristics of this type of asset, including renovated and fully furnished homes in central locations”, says Ramudo.