Spain’s Rental Market one of the Smallest in Europe
Fewer than one in four of Spain’s 18.6 million households rents their home, reflecting strong policy bias toward homeownership. Renters are young, have lower incomes, and are more likely to be immigrants. The rental market is composed mostly of nonprofessional landlords, although recently, international companies have started to develop and manage rental housing. Public policies have been traditionally designed to promote homeownership and have failed to provide enough rental housing, especially public rental housing. Spain has one of the lowest rentership rates among European countries, with just 23% of households renting their homes. As Figure 1 illustrates, this was not always the case. In 1950, the percentage of owners and renters was equal. But starting in the 1960s, rising incomes and homeownership subsidies led to higher homeownership rates, reaching a peak in 2001 at 82%. During the last 20 years, the rental market has been gradually growing due to two reasons: 1) job insecurity and low salaries pushed housing prices out of reach for younger people, and 2) banks are much more cautious about granting mortgages than in previous years. Rentership rates are higher in larger provinces (a geographical unit similar to metro areas in the U.S.). In the two largest urban areas, Barcelona and Madrid, the percentage of renters is 26% and 24%, respectively. In smaller urban areas, this percentage is less than 15%. There is also a lot of geographical variation in rents per square meter. In 2018, the average monthly rent was 675€ per month (8.1€ per square meter) for an average size unit of about 96 square meters (1,033 square feet). Barcelona and Madrid have higher rental prices and smaller dwellings. In Barcelona, the monthly rent for an average rental unit of 90 square meters (969 square feet) is 930€ (12.5€ per square meter). The problem of housing affordability is more intense in those cities, even though wages and incomes are higher. Most rental homes are in multifamily buildings. The percentage of housing for rent exceeds 25% in buildings with two or more dwellings, while 88% of single-family structures are owned-occupied. Around half of renter homes were built before 1980, similar to the age of the homeowner-occupied stock. Rental homes tend to be much smaller than owner-occupied homes with most rental units having a surface area of less than 45 square meters. About 85% of owner-occupied homes have more than 105 square meters. Although the majority of all household types own their homes, renting is relatively more common among single-person households and single-parent households. Younger people are also more likely to rent, with nearly 70% of people ages 16 to 29 renting their homes. The tenure system based on the nationality of the household head. Renting has increased among Spanish-headed households, rising from 16% in 2007 to 20% in 2018. For households led by citizens of other European Union countries, the percentage of renters has also increased, although somewhat more moderately—from 54% to nearly 60%. Rentership is highest for households headed by non-EU citizens.
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