In 2022, the rental market in Spain continues to evolve. It all began in 2020, when many owners-lessors hurriedly started to change priorities due to lockdowns and closed borders, moving from short-term tourist rentals to long-term ones.
The same tendency can also be noted in 2021 and we continue observing it in the current year 2022. That doesn’t necessarily mean that the tourist housing market is facing a crisis, but what many lessors chose the stability over profitability – that is an obvious fact. Among the novelties in the long-term rental market in Spain 2022, the following may be mentioned:
- Increased popularity of insurance against unfair renters.
- Strict requirements for the economic situation of the renter, his family status and working position.
- The willingness of lessors to accept rental payments for 6, and sometimes 12 months in advance.
- The requirement to present guarantors as an additional safeguard.
Rental Market Statistics of Real Estate in Spain
Rental prices in Spain in 2022 continue to rise in almost all regions. Small decrease is observed only in agricultural provinces, which are distant from the sea and do not have a developed industry, service sector, tourism sector and, accordingly, which are not in high demand.
This is the situation on the rental market in Spain with a breakdown of regions as at April 2022:
| Region | Average Rental Rates | Growth/Decline Compared with April 2021 | Historical Maximum of Prices |
| The Whole Spain | 10.9 €/m2 | +1.1% | 11.5 €/m2 (09/2020) |
| Andalusia | 9.0 €/m2 | +4.6% | 9.5 €/m2 (01/2006) |
| Aragón | 8.0 €/m2 | +0.4% | 8.2 €/m2 (04/2008) |
| Asturias | 7.7 €/m2 | +2.8% | 10.8 €/m2 (02/2008) |
| Balearics | 13.2 €/m2 | +15.2% | 14.0 €/m2 (06/2018) |
| Canary Islands | 10.7 €/m2 | +8.1% | 10.7 €/m2 (04/2022) |
| Cantabria | 9.0 €/m2 | +10.8% | 12.7 €/m2 (08/2007) |
| Castile and León | 7.3 €/m2 | +3.9% | 7.3 €/m2 (04/2022) |
| Castile-La Mancha | 6.1 €/m2 | +5.3% | 6.1 €/m2 (04/2022) |
| Catalonia | 14.0 €/м2 | +4.6% | 15.2 €/м2 (05/2020) |
| Valencian Community | 8.2 €/м2 | +7.5% | 9.4 €/м2 (02/2006) |
| Basque Country | 12.4 €/м2 | +0.9% | 12.4 €/м2 (10/2021) |
| Estremadura | 5.6 €/м2 | +5.4% | 5.6 €/м2 (08/2021) |
| Galicia | 7.6 €/м2 | +3.9% | 8.7 €/м2 (05/2007) |
| La Rioja | 7.1 €/м2 | +3.9% | 7.1 €/м2 (04/2022) |
| Community of Madrid | 14.1 €/м2 | +2.5% | 15.4 €/м2 (05/2020) |
| Melilla | 9.1 €/м2 | +2.8% | 9.5 €/м2 (06/2013) |
| Region of Murcia | 6.9 €/м2 | +5.4% | 7.1 €/м2 (10/2007) |
| Navarre | 9.1 €/м2 | +2.9% | 9.1 €/м2 (04/2022) |
Expert Predictions: What’s Waiting for the Rental Market of Spain in the Foreseeable Future
Experts call the current situation on the rental market a boom, connected, firstly, with the partial recovery of the economy and employment; and secondly, by accelerating inflation, the will to invest in safe-haven assets (one of which has always been considered real estate) and make a profit from them.
The Bank of Spain has forecast inflation at 4.5% for 2022, 2.9% for 2023, 2.5% for 2024. Bankinter gives a more pessimistic forecast – 6.9% for 2022, and a more optimistic one – 2.0% for 2023.
In addition, experts unanimously agree that rental prices will continue to rise in the foreseeable future. The year 2022 has been called the year of return to normality where experts predict an increase in rental prices, on average, 5%, and in large cities – up to 10%.
It is worth noting that rental prices have been rising in recent years. In total, since 2015, rental prices in Spain have risen by 41%, primarily due to a significant disparity between supply and demand.
Spanish Urban Renting Law provides for annual indexing of the price fixed in the original contract, depending on the growth of the consumer price index. The opportunity to update prices following inflation was liked by many property owners. This also led to the growth of demand for mortgage loans, because it allowed properties under mortgage to become, albeit minimally, but profitable.
In 2022, the cities, where the maximum increase in real estate rental prices is expected, are the following: Madrid, Barcelona, Malaga, Palma de Mallorca and Valencia.
As for tenants, most of the transactions will be for young people under the age of 35. Already, the share of young tenants exceeds 70%, and the reason for this is the same – it is most difficult for young families with limited incomes to purchase their own homes, the prices of which are inexorably rising (both on the secondary market and from developers), so renting housing becomes an unfortunate necessity.
In the mortgage market, everything is going to the fact that banks will enter into a desperate struggle for young borrowers. Banco Santander has developed a youth financial program for the purchase of the first home up to 95% of the transaction price, however, requiring at least one guarantor. Unfortunately, this is unlikely to affect rental prices, because demand will still exceed supply in large cities and popular resorts.
But what can really change the situation in the rental market of housing in Spain (although it is still unclear in what direction) is the release of the new law on housing, the draft of which has been approved by the Government and now it is awaiting Congressional approval.
The law provides for methods of controlling the rental market, primarily in particularly tense areas, as well as penalties against large owners. On the one hand, the law can provide price control, on the other hand, it can frighten many owners and make them renounce long–term rentals for their properties. Well, time will tell.
