Recent housing market developments in Spain - Pana Alves and Alberto Urtasun - ANALYTICAL ARTICLES - Banco de España
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ECONOMIC BULLETIN 2/2019
ANALYTICAL ARTICLES
11 April 2019
Recent housing market
developments in Spain
Pana Alves and Alberto UrtasunAbstract After the sharp correction during the crisis, activity in the Spanish real estate sector commenced its recovery in early 2014. This improving trend has since been observable both in quantity and price-based indicators. However, this market is well known for its high heterogeneity due to the location of the properties, their type and the nationality of purchasers. The recent buoyancy seems to reflect, among other factors, positive labour market developments and the low cost of borrowing against a backdrop of gradual growth of loans for house purchase. Keywords: housing, prices, mortgage terms and conditions. JEL codes: D12, E22, E24, G21.
RECENT HOUSING MARKET DEVELOPMENTS IN SPAIN
The authors of this article are Pana Alves and Alberto Urtasun of the Directorate General Economics, Statistics and
Research.
Introduction After the sharp correction during the crisis, activity in the real estate sector commenced its
recovery in early 2014. The cumulative increase in real housing investment between 2013
Q4 and 2018 Q4 was 45%, compared with a rise of 15% in GDP in the same period. Other
indicators also showed the cyclical improvement in this sector, such as transactions and
prices. However, this sector is still highly diverse in terms of the location of properties, their
type and the nationality of purchasers. The recent buoyancy seems to reflect, among other
factors, positive labour market developments and the low cost of borrowing against a
backdrop of gradual growth of loans for house purchase.
First, this article reviews recent developments in the main activity indicators (investment,
transactions and new building starts) and house prices from an aggregate and disaggregate
perspective (see Sections 2 and 3, respectively). Next, it analyses the financial conditions
of the sector (Section 4). Lastly, recent developments in the rental market are described
briefly (Section 5).
Housing market As is usual during economic recoveries, in Spain gross capital formation is on a buoyant
developments: recent path. This applies especially to non-construction investment which exceeded its pre-crisis
aggregate indicators level last year (see Banco de España (2018)). Within this improvement, construction
investment was weaker. This shows, on one hand, the readjustment in housing investment
which, supported by the latest recovery reached levels of close to 5.5% of GDP in 2018,
in line with other European countries, compared with 12% before the crisis (see Chart 1).
On the other, the weight of other construction investment as a percentage of GDP remained
low in the last few years, following a ten-year decline.1 It decreased from 9.4% of GDP in
2006 to 5.1% in 2018.
Housing transactions also show the upward trend experienced by the sector in the last five
years. Specifically, it is estimated that there were slightly more than 550,000 house
purchases in 2018, approximately 10% more than in 2017. However, this is much lower
than the house purchases during the pre-crisis real estate boom. For example, average
annual housing transactions stood at around 885,000 during the period 2004-2007 (see
Chart 2.1).
In parallel, following a sharp adjustment during the crisis, house prices, have grown since
they touched bottom in 2014 Q1 (see Chart 2.2). In cumulative terms, prices climbed by
around 27% in nominal terms (22% in real terms) between the start of 2014 and the end of
2018 (see Chart 2.3).2
Residential housing starts also improved, albeit with a slight lag, possibly due to the high
unsold housing stock, resulting from the robust increase in supply during the previous
1 The performance of other construction investment largely reflects the impact of the fiscal consolidation process
which was essentially based on public-sector construction investment, including investment in transport
infrastructure.
2 From their peak in 2007 Q3 until their trough in 2014 Q1, house prices fell by 37% in nominal terms (45% in real
terms).
BANCO DE ESPAÑA 1 ECONOMIC BULLETIN RECENT HOUSING MARKET DEVELOPMENTS IN SPAINCONSTRUCTION INVESTMENT AND GDP CHART 1
Construction investment was weaker than other investment components. In 2017 it stood at around 50% of its pre-crisis level. The readjustment of
housing investment, despite its more recent recovery, is shown by its weight as a percentage of GDP which has moved back onto a normal footing
at levels of close to 5% of GDP in 2017, in line with other European countries.
1 BREAKDOWN OF CONSTRUCTION INVESTMENT 2 HOUSING INVESTMENT (% OF GDP). INTERNATIONAL COMPARISON
% of GDP % % of GDP
25 100 16
14
20 80
12
15 60 10
8
10 40 6
4
5 20
2
0 0 0
95 97 99 01 03 05 07 09 11 13 15 17 95 97 99 01 02 04 07 09 11 13 15 17
OTHER CONSTRUCTION INVESTMENT (% OF GDP) ES DE FR IT
HOUSING INVESTMENT (% OF GDP) PT IE EU
HOUSING INVESTMENT. % OF TOTAL CONSTRUCTION (right-hand scale)
SOURCES: Spanish National Accounts and European Commission.
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boom which was not absorbed during the crisis, given weak demand3 at that time. In any
event, housing starts remain at all-time lows (see Chart 2.4).
As for the match between new housing demand and supply, since 2013 demand levels (house
purchases, measured by new housing transactions registered before notaries) have
continuously exceeded new supply levels (completed houses, measured by building
completion certificates). This means that the volume of unsold homes – estimated to be
around 500,000 units mid-2018 – have slowly, but gradually, been absorbed (see Charts 2.5
and 2.6). This slow correction of the stock could also be reflecting a slight mismatch between
the characteristics of housing in demand, which include location, and the characteristics of
housing available for sale.
Mixed housing market A particular feature of the Spanish real estate market is its high degree of diversity in terms
developments of region, type of housing (new builds or existing properties) and the nationality of
purchasers.
In recent years, house prices have performed dissimilarly in the different regions. Although
prices generally moved upwards in all regions, the increase which had built up from their
low during the crisis (that occurred in most regions in 2014) amply exceeded 20% in the
most buoyant regions (49% in Madrid and 39% in Catalonia), whereas in the weaker
regions it stood at around 8% (see Chart 3.1). The rate of increase in house purchases is
also very mixed by region (see Chart 3.2).
As for supply, a comparison between housing approvals recorded in 2018 and their low
during the crisis, shows that they recovered by more than 200% in Catalonia, Andalusia
3 The concept of unsold housing “stock” is the differential which has built up since 2004 between the volume of
completed houses and the number of new house purchases. Thus, it is assumed that this stock was negligible
in 2003. Therefore, this measure approximates the overhang of unsold houses during the crisis and how it has
decreased. However, since the depreciation rate of these assets is very small, their initial condition is very
significant. Consequently, the estimation of this series is subject to high uncertainty.
BANCO DE ESPAÑA 2 ECONOMIC BULLETIN RECENT HOUSING MARKET DEVELOPMENTS IN SPAINHOUSING MARKET. PRICES, SUPPLY, DEMAND AND STOCK CHART 2
Housing transactions also show the upward trend experienced by the sector in the last five years. Specifically, there were slightly more than 550,000
house purchases in 2018, approximately 10% more than in 2017. However, this is much lower than the house purchases during the pre-crisis real
estate boom.
1 LEVELS 2 ANNUAL RATES OF CHANGE
Prices. Index (2015=100) Prices (%)
160 20
2005
150 15
2007
140 2007 10 2018
130 5
120 0 2014
110 2018 -5
100 -10
2004
90 2014 -15
80 -20
200 300 400 500 600 700 800 900 1,000 -40 -30 -20 -10 0 10 20 30
Transactions. 000s Transactions (%)
3 HOUSE PRICES 4 NUMBER OF HOUSING APPROVALS
2004 Q1 = 100 000s
100 1,000
180
90 900
160 80 800
70 700
140
60 600
120 50 500
40 400
100 30 300
20 200
80
10 100
60 0 0
04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 95 97 99 01 03 05 07 09 11 13 15 17
NOMINAL TERMS REAL TERMS MONTHLY AVERAGE 12-MONTH MOVING TOTAL (right-hand scale)
5 NEW HOUSING DEMAND AND SUPPLY 6 UNSOLD HOUSING STOCK (a)
Number of houses Housing stock accumulated since 2004
160,000 800,000
140,000 700,000
120,000 600,000
100,000 500,000
80,000 400,000
60,000 300,000
40,000 200,000
20,000 100,000
0 0
05 06 07 08 09 10 11 12 13 14 15 16 17 18 05 06 07 08 09 10 11 12 13 14 15 16 17 18
BUILDING COMPLETION CERTIFICATES NEW HOUSE PURCHASES
SOURCES: INE, Ministerio de Fomento and Banco de España (based on data from the Ministerio de Fomento).
a The unsold housing stock is the differential which has built up since 2004 between completed houses and new house sales.
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and the regions of Madrid and Valencia, whereas in other regions overall growth was lower
than 90% (see Chart 3.3). There is no single pattern of the relationship between price and
demand, supply and stock (see Chart 3.4) at region level, which indicates that the housing
market is slightly segmented. In particular, these data seem to confirm that the
characteristics of housing in demand do not necessarily coincide in some areas with the
available supply and characteristics such as size, quality and location may differ.
BANCO DE ESPAÑA 3 ECONOMIC BULLETIN RECENT HOUSING MARKET DEVELOPMENTS IN SPAINHOUSING MARKET BY REGION. GROWTH OF PRICES, TRANSACTIONS, APPROVALS AND STOCK OF HOUSING CHART 3
The cross-regional performance of prices and transactions is mixed and is a highly significant factor for understanding the housing market in Spain.
1 NOMINAL GROWTH OF HOUSE PRICES SINCE THE LOW. 2018 Q3 2 GROWTH OF HOUSING TRANSACTIONS SINCE THE LOW. 2018 Q3
11 21 123 130
12 18 60 102
11 107
14 92
11 39 85 97
13 102
49 109
16 86
8 8 66 84
37 115
12 81
18 85
< 11%
20 0% - 75%
11% - 16% 80
16% - 23% 75% - 90%
> 23% > 90 %
3 GROWTH OF HOUSING APPROVALS SINCE THE LOW. 2018 Q3 4 ESTIMATE OF UNSOLD HOUSNG STOCK. 2018 Q4
Percentage of total housing in 2017 (a)
259 162 1.1 2.8
113 88 0.2 0.4
158 0.1
19 2.2
399 0.0 2.0
100
109 0.7
238 0.9
245 4.7
87 108 0.0 2.3
222 0.8
92 5.3
272 2.6
< 0.5%
0% - 90% 282 0.5% - 1% 1.4
90% - 180% 1% - 2%
> 180 % > 2%
SOURCES: INE, Ministerio de Fomento and Banco de España (based on data from the Ministerio de Fomento).
a The unsold housing stock is the differential which has built up since 2004 between completed houses and new house sales.
The developments in another indicator which shows some disparity is purchases by
housing type. During the current phase of recovery, purchases were mainly underpinned
by the used housing segment whereas purchases of new homes moved on a slightly
downward trajectory,4 although they seem to have stabilised in 2018 (see Chart 4.1). Since
the low reached in 2014, growth of new house prices has been slightly higher than that of
second-hand homes, albeit with some exceptions. That said, the price per square metre
of brand-new homes remains higher (see Charts 4.2 and 4.3).
As for the nationality of purchasers, the increase in housing sales is visible in purchases by
foreigners (around 16% of the total in 20185 compared with an average of 10% during the
period 2007‑2013) and in acquisitions by Spanish residents (see Chart 5.1). The British
4 As discussed in the previous section, housing starts remain at all-time lows.
5 Data from the first half of 2018.
BANCO DE ESPAÑA 4 ECONOMIC BULLETIN RECENT HOUSING MARKET DEVELOPMENTS IN SPAINHOUSE PRICES AND THE NUMBER OF HOUSING TRANSACTIONS CHART 4
During the recovery, purchases were mainly underpinned by the used housing segment, whereas purchases of new homes held on a slightly downward
trajectory.
1 NUMBER OF HOUSE PURCHASES
12-month moving total (000s)
1,200
1,000
800
600
400
200
0
06 07 08 09 10 11 12 13 14 15 16 17 18
TOTAL HOUSING NEW HOUSING USED HOUSING
2 HOUSE PRICES IN EURO PER SQUARE METRE 3 YEAR-ON-YEAR GROWTH OF HOUSE PRICES
€ / m2 %
2,560 10
2,060 5
0
1,560
-5
1,060
-10
560
-15
60 -20
07 08 09 10 11 12 13 14 15 16 17 18 12 13 14 15 16 17 18
SECOND-HAND HOUSE PRICES NEW HOUSE PRICES
SOURCES: INE and Ministerio de Fomento.
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have the highest weight in total house purchases by foreigners (14%), followed by the
French and Germans (8% each) and the Romanians and Moroccans (7% each).6 There has
been a significant reduction in house purchases by Britons since 2017, which is possibly
linked to Brexit, since the average during 2018‑2016 was 19%. Based on their geographical
distribution, house purchases by foreigners have a significantly greater weight in the
Mediterranean regions and in the islands (see Chart 5.2).
The financial setting One of the factors underpinning the pick-up of the housing market has been the
improvement in financing conditions.7 Thus, the synthetic interest rate8 applied to new
mortgage loans fell from 3.1% at the beginning of 2014 to around 2.1% in February 2019
(see Chart 6.1). The breakdown of transactions based on the interest-rate reset period
shows that costs declined more steeply for loans whose terms and conditions are reviewed
after five or more years (a segment including fixed-rate and mixed-rate loans). This
segment’s costs decreased by around 3.3 pp over that period, compared with the costs of
6 Most of the Moroccans and Romanians who purchase houses are residents in Spain.
7 However, as a result of changes in lending policies since the crisis, these improvements in financing conditions
have not been distributed uniformly across households.
8 The interest rate mentioned here is the narrowly defined effective rate (NDER), which excludes associated costs
such as mortgage payment protection insurance premiums and fees and commissions which offset related direct
costs. The NDER is defined in Banco de España Circular 1/2010 of 27 January 2010.
BANCO DE ESPAÑA 5 ECONOMIC BULLETIN RECENT HOUSING MARKET DEVELOPMENTS IN SPAINHOUSING TRANSACTIONS BY NATIONALITY CHART 5
As for the nationality of purchasers, the increase in housing sales is visible in purchases by foreigners and in acquisitions by Spaniards.
1 NUMBER OF HOUSE PURCHASE TRANSACTIONS BY SPANIARDS 2 HOUSE PURCHASES BY FOREIGNERS PER REGION
AND FOREIGNERS
12-month moving total (000s) 000S Purchases by foreigners as % of total
1,200 150 35
1,000 125 30
25
800 100
20
600 75
15
400 50
10
200 25 5
0 0 0
06 07 08 09 10 11 12 13 14 15 16 17 18 AN AR AS BA CA CB CO CL CT VA EX GA MA MU NA PV LR
TOTAL UNITS SPANIARDS FOREIGNERS (right-hand scale) 2007 2018 (H1)
SOURCE: Ministerio de Fomento.
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mortgages with a reset period of up to one year (essentially floating-rate mortgages),
which fell by 1.3 pp. This decline is not on account solely of lower key policy rates (generally
the twelve-month EURIBOR for floating-rate mortgages and the swap interest rate at the
corresponding term for other mortgages); the reduction in lending margins applied is also
a determining factor. These factors account for approximately half of the fall in mortgages
whose interest rate is revised each year and approximately 100 bp in mortgages which are
revised after more than five years.
In parallel, the average repayment period for new mortgage loans has lengthened in recent
years, more significantly in the case of fixed interest rate loans,9 which stood at more than 22
years at end-2018, up from less than 13 in early 2014 (see Chart 6.2). The extension of fixed-
rate mortgage repayment periods, in a setting of low interest rates, has made this product
more attractive for borrowers, leading to a strong increase in the proportion of new mortgages
taken out at fixed rates (from just 6% in 2014 to 40% in February 2019)10 (see Chart 6.3).
The Bank Lending Survey (BLS) also shows that overall lending conditions in the house
purchase loan market have improved in recent years, mainly reflected in a decline in the
margins on ordinary loans and, to a lesser extent, in non-interest rate charges11 (see
Chart 6.4).12 By contrast, according to the banks surveyed, margins on riskier loans increased
somewhat, as did collateral requirements. Furthermore, as shown by data from the Association
of Registrars, the median value of the mortgage loan to house transaction price ratio has
remained stable at 80% since 2012, after having fallen sharply during the crisis.13
9 Fixed-rate mortgage loans are those whose interest rates stay the same throughout the life of the loan. Mortgages
with a fixed interest rate for part of the life of the loan and a variable interest rate for another part, also called
mixed mortgages, are considered variable-rate mortgages; therefore, they are not included in this category.
10 For a more detailed analysis, see “Box 6. Recent changes in interest-rate reset terms for new housing loans”,
Economic Bulletin, 1/2017, Banco de España.
11 These are various kinds of fees which may be part of the pricing of a loan, such as commitment fees on
revolving loans, administration fees (e.g. document preparation costs) and charges for enquiries, guarantees
and credit insurance.
12 For further details, see the quarterly analytical articles published in the Banco de España Economic Bulletin on
the results of the Bank Lending Survey.
13 For further discussion of the loan-to-value and loan-to-transfer value ratios, see the analytical article “The loan
to value ratio for housing in Spain over the period 2004-2016”, Economic Bulletin, 1/2019, Banco de España.
BANCO DE ESPAÑA 6 ECONOMIC BULLETIN RECENT HOUSING MARKET DEVELOPMENTS IN SPAINIMPROVEMENT IN FINANCING CONDITIONS IN THE MARKET OF LOANS FOR HOUSE PURCHASE CHART 6
During recent years, there has been an improvement in the financing conditions applied to loans for house purchase. Interest rates have decreased and
repayment periods have lengthened, particularly in fixed-rate mortgages, which has increased their appeal and triggered a rise in their relative weight.
Furthermore, credit standards and general financing conditions have eased. The improvement in financing conditions has contributed to the recovery of
lending, although outstanding bank lending has continued to contract since the new lending volume has remained below the amount of repayments.
1 INTEREST RATES OF MORTGAGES ACCORDING TO RESET PERIOD 2 AVERAGE LOAN REPAYMENT PERIOD
OF TERMS AND CONDITIONS
% Years
7 26
6 24
22
5
20
4
18
3
16
2 14
1 12
2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018
MORE THAN 5 YEARS AVERAGE FIXED RATE VARIABLE RATE
UP TO 1 YEAR
SYNTHETIC
SPREAD BETWEEN LOANS OF UP TO 1 YEAR AND 12-MONTH EURIBOR
3 WEIGHT OF NEW LOANS ACCORDING TO INTEREST-RATE RESET PERIOD 4 BLS: CHANGE IN CREDIT STANDARDS AND MARGINS APPLIED TO LOANS (a)
Cumulative 12-month flow
% % %
100 0 10
Tightening
90 10 5
80 20 0
70 30 -5
60 40 -10
50 50 -15
40 60 -20
Easing
30 70 -25
20 80 -30
10 90 -35
0 100 -40
14 15 16 17 18 19 2014 2015 2016 2017 2018 2019
MORE THAN 5 YEARS CREDIT STANDARDS MARGINS ON ORDINARY LOANS
1-5 YEARS
UP TO 1 YEAR
FIXED-RATE MORTGAGES (INE data, right-hand scale)
5 LOAN TO TRANSACTION PRICE RATIO OF NEW LOANS (b) 6 YEAR-ON-YEAR GROWTH OF BANK LENDING
% %
120 10
8
110 6
4
100
2
90 0
-2
80 -4
-6
70
-8
60 -10
04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 2015 2016 2017 2018 2019
CONTRIBUTION OF NEW LOANS
CONTRIBUTION OF REPAYMENTS
OUTSTANDING BANK LENDING
SOURCES: Banco de España, Colegio de Registradores and INE.
a Indicator = percentage of banks which have tightened their credit standards or margins considerably × 1 + percentage of banks which have tightened their credit
standards or margins somewhat × 1/2 – percentage of banks which have eased their credit standards or margins somewhat × 1/2 – percentage of banks which
have eased their credit standards or margins considerably × 1.
b Median value of the ratio.
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BANCO DE ESPAÑA 7 ECONOMIC BULLETIN RECENT HOUSING MARKET DEVELOPMENTS IN SPAINThe BLS also shows that credit standards for these loans have eased in recent years.
According to the banks surveyed, the factors contributing to this are, by order of
importance: the better outlook for economic activity in general, borrowers’ greater
solvency, increased competition among lenders and more favourable prospects for the
housing market. In line with the changes in credit standards and with the greater solvency
of applicants, the percentage of rejected loan applications in this segment has tended to
decline since 2015, according to the responses of the banks participating in the BLS.
The increase in supply in the segment of loans for house purchase in recent years has
been accompanied by an increase in demand, resulting in ongoing growth in the new
lending volume. In spite of this, the moderation of the year-on-year rate of decline in the
outstanding debt balance has been slow, having dropped from 3.7% at end-2014 to 1.1%
in February 2019. This is because the greater buoyancy of new loans has largely offset the
acceleration of repayments, which in turn is the result of the high stock of debt accumulated
during the pre-crisis boom (see Chart 6.6). However, since the beginning of 2018,
repayments have ceased to grow, stabilising at around €12 million per quarter. This has led
to a quicker decline in the rate of contraction of the outstanding bank debt balance.
The rebound in rental From an international viewpoint, the proportion of the population that rents a home in
housing Spain is still low (see Chart 7.1). However, the most recent data from the Living Conditions
Survey (LCS) point to an increase in the last few years in the percentage of households
that rent (16.9% in 2017, up from 14.2% in 2008). Although home ownership continues to
be prevalent, home rental is gaining weight (see Chart 7.2).14 Although this trend towards
a greater weight of rental housing is widespread, it has grown the most among 16-to-29
year-olds, followed by 30-44 year-olds (see Table 1). This change may be explained, at
least in part, by factors linked to the impact of the economic crisis on these population
segments, but possibly also by sociological factors linked to changes in preferences. Also,
the tax bias favouring house purchase over rental has decreased in this period due to the
tax changes introduced.
Driving economic factors include most notably the impact of the recession on labour market
conditions, particularly for young individuals. On data from the Structure of Earnings Survey,
between 2008 and 2016 average earnings fell 15% for employees between 20 and 24 years
old and 9% for those between 25 and 29. But young people also saw how other labour
conditions deteriorated. Specifically, the unemployment rate for employees aged between
16 and 29 peaked at 42.4% (2013), with an incidence of long-term unemployment of 52.1%
(2014) and a ratio of temporary to total employees of 57.4% (2017). However, these
indicators were slightly less negative in 2018 (29.3%, 35.8% and 56.3%, respectively).
Housing taxation has undergone reforms in recent years. The tax credit for purchase of
principle residence was last eliminated on 1 January 2013. Also, taxes on home ownership
and house purchases (specifically transfer tax in some regions and VAT in all regions) have
been raised, so that their weight in GDP has increased in Spain over the last few years.15
These seem to be the most significant changes as regards reducing the tax bias in favour
of house purchase vis-à-vis rental, since tax benefits for house rental continue to be low
by international standards.
14 Census data also seem to point towards a minor increase in the weight of rental housing. The 2011 census
shows an increase in the weight of the rental market for the first time (13.5%, compared with 11.4% according
to the 2001 census).
15 See López-Rodríguez and García Ciria (2018).
BANCO DE ESPAÑA 8 ECONOMIC BULLETIN RECENT HOUSING MARKET DEVELOPMENTS IN SPAINRENTAL MARKET CHART 7
The proportion of the population that rents a home in Spain is small. However, the latest data available point to an increase in the percentage of
households that rent in recent years. Although the trend towards a greater weight of rental housing is widespread, it has grown the most among 16-to-29
year-olds, followed by 30-to-44 year-olds.
1 PROPORTION OF POPULATION THAT RENTS A HOME 2 TENURE STATUS (% OF MAIN RESIDENCES) (a)
% % %
60 88 18
86 16
50
84 14
40 82 12
80 10
30
78 8
20 76 6
74 4
10
72 2
0 70 0
BE DE IR GR ES FR IT NL AU PT UK 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17
2007 2011 2017 OWNER-OCCUPIED
RENTED (right-hand scale)
FREE LET AND OTHER (right-hand scale)
3 HOUSING RENTAL PRICES (b) 4 HOUSE PURCHASE PRICES (b)
% year-on-year growth % year-on-year growth
25 25
20 20
15
15
10
10
5
5
0
0
-5
-5 -10
-10 -15
-15 -20
2010 2011 2012 2013 2014 2015 2016 2017 2018 2010 2011 2012 2013 2014 2015 2016 2017 2018
MAX.-MIN. MEDIAN
5 RENTAL VS. SALE PRICES IN MADRID (c) 6 RENTAL VS. SALE PRICES IN BARCELONA (c)
2006 Q4 = 100 2006 Q4 = 100
140 140
120 120
100 100
80 80
60 60
40 40
20 20
0 0
06 07 08 09 10 11 12 13 14 15 16 17 18 06 07 08 09 10 11 12 13 14 15 16 17 18
RENTAL PRICE SALE PRICE
SOURCES: INE, Eurostat, Idealista and Banco de España.
a Until 2004, Household Expenditure Survey; since 2005, Living Conditions Survey (LCS).
b Year-on-year growth of price per m2 in December.
c Half-yearly data until 2010. The observations of June and December were allocated to March and September, respectively.
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BANCO DE ESPAÑA 9 ECONOMIC BULLETIN RECENT HOUSING MARKET DEVELOPMENTS IN SPAINRENTAL HOUSING TABLE 1
Percentage of homes per tenure status and age of the reference person.
At market price Below market price
2008 2017 2008 2017
Total 11.0 14.3 3.1 2.6
16-29 years old 32.3 48.9 5.2 3.3
30-44 years old 16.2 25.1 2.5 2.9
45-64 years old 8.0 11.3 3.1 2.7
65 and above 3.7 4.3 3.4 2.2
SOURCE: LCS (INE).
Rental income has also increased significantly in the most recent period. For example,
according to information from the real estate portal Idealista,16 rental income grew 9.3% in
2018 (showing some moderation compared with the 18.4% increase posted a year earlier).
As occurs with purchase prices, rental price growth rates are also highly heterogenous by
region (see Charts 7.3 and 7.4). However, the difference between the highest and the
lowest growth is smaller in the case of rentals, having ranged from -2% (Barcelona) to 11%
(San Sebastián) in 2018.
In Madrid and Barcelona rental prices were much more stable than sale prices during the
recession, and yet they started to recover earlier afterwards (see Charts 7.5 and 7.6).
Although with a slight lag, sale prices have also increased significantly in these cities,
standing close to the level of 2006. In any event, while sale prices have not reached the
pre-crisis level, rental prices have exceeded it.17 Notably, in 2018 rental prices posted
weak growth in comparison with previous years, even dropping in the case of Barcelona.
Sale prices in Barcelona also slowed (according to this source of information, from more
than 15% in 2017 to less than 3% in 2018).
11.4.2019.
REFERENCES BANCO DE ESPAÑA (2018). “The buoyancy of investment in the recovery: determinants and challenges”, Annual
Report 2017, Chapter 3, Banco de España.
LÓPEZ-RODRÍGUEZ, D. and C. GARCÍA CIRIA (2018). “Estructura impositiva de España en el contexto de la Unión
Europea”, Documento Ocasional Nº 1810, Banco de España.
LÓPEZ-RODRÍGUEZ, D. and LL. MATEA (2019). “Evolución del mercado de alquiler en España”, Economic Bulletin,
forthcoming, Banco de España.
MAZA, L. Á., and J. PEÑALOSA (2010). “The residential investment adjustment in Spain: the current situation”,
Economic Bulletin, January 2011.
MENÉNDEZ PUJADAS, A. (2018). “The October 2018 Bank Lending Survey in Spain”, Banco de España, Economic
Bulletin, October 2018.
FEDERAL RESERVE BANK OF ST. LOUIS (2018): “The housing supply puzzle: Part 1, divergent markets”, Economic
Synopses.
16 These indicators should be regarded with due caution. For a more detailed analysis, see López-Rodríguez and
Matea (2019) forthcoming.
17 The lack of data relating to the pre-crisis period makes it difficult to analyse in depth the relative performance
of the two prices.
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