The Ministry of Transport, Mobility and Urban Agenda this week presented the state reference system for rental price indexes, which indicates that Madrid, Barcelona, Malaga, Valencia, Malaga, the Canary and Balearic Islands are the main “stressed” areas. The indicator has 11.2 million data on rentals for the last four years. It will be updated annually with information on 1.7 million properties and 33,662 census sections.
The new mechanism will provide a rental price index with market data for the first time in Spain. This will allow public administrations, real estate market agents and citizens to get detailed information on the evolution of rental prices.
The new statistic collects information with data from the Tax Agency, the National Statistics Institute, the Property Register, the Bank of Spain, the Association of Registrars and the Economic Affairs Department of the Presidency. It shows an unprecedented level of detail, giving prices by communities, provinces, municipalities, districts and even census units. It could be the tool used by City Councils and Autonomous Communities to control rental prices.
The Minister of Transport, Mobility and the Urban Agenda, José Luis Ábalos, has commented that “this index is undoubtedly here to stay,” and that the system seeks to protect such a “fundamental” right as access to housing. According to data provided by Ábalos, 24% of households in Spain reside in rental housing, of which 38% spend more than 40% of their income to pay this rent.
In general terms, the real estate sector welcomes this index. It will provide a statistical contribution to the sector, and therefore, more transparency to the market. The only fear is that there is no ulterior motive for the initiative, such as intervening in rental income.
For Bankinter’s analysis team, “rent control would be bad news for the real estate market, as it would generate uncertainty and make rental housing investment less attractive.” According to their calculations, the new statistic places the gross return on rent between 5% for San Sebastian and 9.1% for Toledo. “These returns are much higher than those offered so far by statistics such as those from the Bank of Spain, which indicate a gross return on rental housing of 3.8% on average in Spain,” the analysts conclude.