The lack of offer marks the trend of the rental market
During this first semester of 2017 the trend of the rental market has been the part of the real estate market that has generated the most news, most of them little documented and very general, which has generated a little truthful information about the real functioning of the market.
The most remarkable fact, from our point of view, has been the publication of the Rental Reference Index, a tool developed by the Generalitat of Catalonia with the help of some actors in the real estate sector that provides transparency to the market trend and where all the parties, owners and tenants, can be referenced to make the appropriate decisions.
The analysis of this first semester indicates that we have exceeded expectations in all our offices and we have made 26% more contracts than in the same period of 2016. However, we are below the contracts that were made in that same period 4 or 5 years ago
The Rotation has been similar to the same period of the previous year. On average we rent the property in a month and a half.
There is a certain amount of real estate that does not enter the commercial circuit and is not counted in this rotation data, which are real estate that before the tenant leaves, we have the next one to enter.
In several reports we have pointed out that the lack of supply is affecting much the trend of the rental market. Contract renewals have also been increasing for years. Basically they are tenants who prefer to stay in the apartment where they were instead of going to the rental or sale market.
In contrast to the small number of contracts that are made, there is the rapidity in which the properties are rented and the increase in rental income that has been and continues to be in recent months.
These are the factors that negatively affect the offer of the rental market and that we have commented on in other reports, it is worth remembering:
- Important stock of what was previously long-term rental that has been earmarked for tourist or short-term rental.
- Wrong policies of the Administration towards the owners of rental properties.
- Lack of legal security. The clearest example of this is the permissiveness that exists with the phenomenon of employment.
Regarding the increase in rents, from 2013 to the 2nd Quarter of 2017, the market trend is growth in all areas where we work. In Barcelona, the most pronounced growth began in the 2nd Quarter of 2015.
As always, we must take these data with caution and not extrapolate them so that the entire market behaves the same in all areas and all quarters. We always say that the housing stock at each moment determines a lot the prices at which it is arrived.
And, how do we see the future?
Well it is risky to say, but it is clear that the problem of supply will not be resolved overnight. In our sector, providing supply in the market requires time and a strategic vision of the future of the evolution of housing. In the short term, we believe that the upward trend in rents will continue, but we expect it to be at a more moderate pace. In the medium term it could be that with the recovery of sales of new construction, especially in the first crown of Barcelona, the offer will be normalized in two senses: on the one hand, people who were renting in the city and bought the outskirts will release rental flats and, on the other hand, investors will put their rental flats in these areas. Something we do have clear: the offer and any housing policy that is made should be understood from the metropolitan point of view and only from there we will be able to solve the problem we have today with the rental market.
Consult our Market Report for a broader analysis of the state of the market.