Average price of renting property in Barcelona

Price of renting property in Barcelona has frozen at 1000 euros a month

The price of renting a flat in Barcelona went up by 62.9% between 2002 and 2007. However it remained almost the same last year at around 1000 euros a month.

According to the department for statistics for the town hall of Barcelona the price of renting a property actually went down by 1% during the last six months of 2008. This decrease which is the largest in the last decade coincides with the fall in the sale of properties and a slump in construction work in the city. According to the Colegio de Aparejadores y Arquitectos Técnicos de Barcelona (CAATB), only 12,403 properties were started in 2008 which is a fall of 72% compared to 2007.

Renting a 92 square metre flat in Barcelona cost 884 euros a month in 2003. Today the average size of a flat is smaller at 74.7 square metres and the average cost of renting is 1,096 euros a month. Last year was the first time that the cost of renting rose above 1000 euros. However during the last six months of the 2008 rents started to go down and the average price of renting per square metre went down from 14.8 euros in June to 14.6 euros in December.

José García Montalvo, a professor of Applied Economics for the University of Pompeu Fabra, said that this decrease showed the beginnings of a tendency. He said that the price of renting was going down by more than 1%. He also said that in the last quarter of 2008 there had started to be renegotiations between tenants and landlords over the cost of renting, something which was not recorded in any statistics.

See: Renting property in Spain

Estimated drop in Spanish property in 2009

Property prices to fall more than 20% in 2009 and surplus housing stock estimated to reach 1.5 million

According to recent figures published by the property evaluators Tinsa property prices will fall by 20% by the end of 2009 with a continual fall in prices of between 1 and 1.4 percentage points a month. From January 2008 to January 2009 property prices fell by 10.1% a figure which completed 11 months of consecutive falls according to the Index of Spanish Property Markets (IMIE) published by Tinsa. The principal cause of the fall in prices is the falling number of house sales and the surplus stock which is continually growing.

In a press conference Luis Leirado, the Chairman of Tinsa, said that 2009 had started with an interannual fall of 10.1% which is the first two digit fall in recent years. Furthermore it is 1.3 points more than at the end of 2008.
This interannual fall of 10.1% has hit Mediterranean coastal areas the most where prices have fell by up to 12.6% from January 2008 to January 2009. Metropolitan areas have also seen prices fall by 10.9%. With regards to capitals and large cities prices have fallen by 9.6% and in the rest of municipalities prices have fallen by 10%. In the Balearic Islands and the Canary Islands prices have fallen by 8.2%.

According to Tinsa the reason behind these price decreases is the fall in the number of house sales together with the problem of the accumulation of 930,000 surplus properties by the end of 2008. Tinsa forecasts that the number of surplus properties in the market will reach 1.5 million this year.

Another important factor is the number of new housing stock coming onto the market. In 2008 745,000 houses and flats were finished but only 287,000 were sold an imbalance which is expected to get worse in 2009. The increase in surplus housing stock is a consequence of building projects begun in 2007 ( a record breaking year) which now means that about 45,000 new properties come onto the market every month but the sales of new houses is now just 20,000 a month.

According to Leirado, the negative panorama which the residential housing market now faces will only get better once the economy picks up or the opinion of potential buyers who do not consider it a good moment to buy property changes.
In his opinion for this change to come about and for buyers to take more interest there needs to be more finance available. However, whilst the number of unemployed continues to rise and the income of households continues to decrease this looks unlikely to happen. According to estimates made by Tinsa, household income fell by 33,000 euros to 32,900 euros in the fourth quarter of 2008 which is the first fall since the 1990’s. With regards to property sales picking up Leirado considers both renting and subsidised housing (VPO) as two interesting alternatives that could help reactivate the housing market.

Mortgages in Spain fall by 40 percent in 2008

New mortgages conceded by banks and building societies fell by 40% in 2008 compared to 2007. According to figures released by the Bank of Spain and published in this El Mundo article, in 2008 87,074 million euros were conceded in mortgage lending compared to 145,298 million euros in 2007 and 170,297 million euros for 2006.

The economic crisis meant that banks and building societies conceded fewer credits in 2008 although the overall amount of mortgage lending continued to grow. In 2008 mortgage lending by banks and building societies closed at 644,656 million euros which is just 4.4% more than in 2007 when mortgage lending grew by 13% and a growth of 22% for 2006.

December was the 26th month in which the amount of new mortgages registered an interannual fall – a tendency which began in September 2006 when mortgage lending fell by 4.63%.

Out of all the new loans conceded in 2008 5,648 million euros were lent in December which is 42% less than in December 2007. February and April were the best months for mortgage lending in 2008 when banks and building societies lent 9,845 and 9,158 million euros respectively.

According to the banking sector mortgage lending will continue to decrease not only due to growing unemployment and the economic situation but also because of the lack of solvent applicants.

Related: Mortgages in Spain ## Mortgages for non-residents in Spain

Costa Blanca building industry paralysed by recession

In a report published last week by the Official College of Surveyors and Architects of Alicante it was confirmed that activity in the construction sector had come to a virtual standstill in Alicante with a fall by 74% in the start of new building projects compared to 2008 (8,103 building permits compared to the 31,655 granted in 2007). Moreover, 700 of the 1,565 building projects that were begun in 2008 have now been stopped.

This slump in construction has no precedent in the Costa Blanca and although a slow down began at the end of 2004 nobody expected the present crash. The decrease in the housing market in Alicante is the biggest in Spain and is 14 points more than the average for the whole country which was saw a fall of 60% in 2008.

Out of 366,038 new houses and flats built in the province of Alicante since the start of 2000, only 8,103 were in 2008 a year in which the figure for completed building projects was not very positive either: 25,158, when two years previously – the normal amount of time to develop a project – 48,133 had begun (2006). The fall of 74% in the start of new projects in 2008 is even worse than it first appears due to the fact that this fall is in relation to figures for 2007 which were also negative with a fall of 34% having being registered.

According to the College of Surveyors and Architects of Alicante the figures reveal that the housing sector is suffering its worst moment ever recorded.

The report which was published yesterday also reveals that there are much fewer building projects currently underway. September 2008 was the worst month in terms of new building permits granted in Alicante - 283. In the month of July 2004 at the height of the building boom, 6,884 permits were granted.

According to the College, currently all efforts are aimed at getting rid of surplus stock, refinancing debts or reducing the workforce.

The excess housing stock in Alicante is currently believed to be around 40,000 a number. Solutions to the present situation are complicated by the fact that banks and building societies are reluctant to grant mortgages to potential buyers.

Source: Diario Informacion

Property sale in Spain

Barcelona Meeting Point to hold a reduced cost property fair

Following the recent example of lCaixa Terrassa and Procam, the subsidiary of Caixa Catalunya, which decided to sell some of its new flats at a discount of 30%, Barcelona Meeting Point presented its plans to hold a low cost property fair in which new and used properties could be bought with discounts of 30% or more on their original selling price.

Under the slogan ‘everything at the best price’ estate agents, property developers and private sellers are invited to occupy the stands at the real estate fair which will take place between the 12th and 14th June this year. Some banks will also be present so that people can apply for mortgages.

The only requirement for those who want to occupy a stand is that their property prices must be reduced by at least 30% and the original higher price must be indicated. Each stand will occupy an area of 10 metres squared and will cost 3,500 euros. Stands can even be occupied collectively (for example various private sellers could rent one space).

Empty flats for sale in Spain

Yesterday the Minister for Housing, Beatriz Corredor, placed the number of empty new flats on sale at 650,000. At a meeting of Tribuna Barcelona, Corredor presented the government’s plan for the rehabilitation of properties 2009-2012 for which the government has put aside 10,000 million euros.

Corredor urged Catalan business men and women present at the meeting to opt for the rehabilitation of existing properties rather than to build more new ones. She also pushed the idea of renting properties and said that 24,000 Catalan families had benefited from financial incentives provided by central government to help them rent a property to live in.

Corredor said that the rehabilitation of properties was a way of helping the construction sector and also a way of modernizing the Spanish housing sector. The rehabilitation plan forecasts that up to 470,000 properties could be renovated creating 75,000 new jobs.

She also reminded those attending the meeting that the strategy of large construction companies during the property boom over recent years had been to carry out ‘extensive’ activities which meant that they had acquired high levels of debt. She said that while in Spain only 20% of construction activity was aimed at the rehabilitation of existing properties in countries like Germany more than half of construction activity was destined for the rehabilitation of properties.

Corredor also showed her support for widening the private rental market. She said that in Spain only 11% of people rented a property to live in while in Germany this figure rose to 57% and in Holland it was 47%. However, she also supported the idea of modifying the law on renting properties which would strengthen the legal rights of landlords.