Pay a monthly rent or take out a mortgage to buy a home? What is currently more profitable? Before making this decision, several factors must be taken into account, such as the place of residence, the type of property, the economic situation or the levels of inflationamong others.
In this sense, the specialists of the iAhorro platform point out that in some communities, such as the Basque Country, Catalonia or Madrid, “the effort involved in paying rent is up to 13 points higher than that involved in paying a home mortgage”.
Consumers begin to opt for the purchase
During 2021, the price of housing in Spain experienced an increase, although “The purchase and sale operations also marked their maximum level since 2013”, added in the statement. In fact, in 2021 there was a rise of 3.7% compared to 2020. However, the rental price experienced falls. “The real estate portals Fotocasa and Idealista registered drops of 3.6% and 4.5% in their respective annual price reports“, they detail in iSavings.
So what is happening in Spain? “There is a moderate movement of consumers who rented towards the purchase”, explains Antonio Gallardo, financial expert at iAhorro. This situation could be related to the drop in the Euribor and interest rates during 2021. Therefore, in turn, “purchase prices rise and rental prices decrease”.
What is the difference economically?
A study carried out by the mortgage comparator, based on the average data offered by the INE, analyzes the effort that the purchase or rental of a home entails for Spaniards. The effort in paying the mortgage is 26.37%, while that of paying the rent is 38.71%.
“Precisely, that difference of 12.34 percentage points means that, in general, renting is still less profitable for Spaniards than buying a home“, they point out.
The average fee to pay a mortgage is 674.45 euros and for rent it increases to 990 euros. “The main economic handicap of the purchase is that the future owner must face an expense much greater than the installments. He must have saved 30% of the value of the house for the entry and management expenses, something that does not usually cover the mortgage”, indicates Antonio Gallardo.
The regions in which it is more profitable to buy
This way, Many people, especially the youngest, could save more than 300 euros per month if they bet on the purchase. “In the rent you also have to make an effort in the form of a deposit and advance payments, but it is much lower,” he stresses. This is the main obstacle why many people choose to rent.
By regions, the differences in savings are notable, especially between those who live in an urban environment and those who opt for more rural areas. In Catalonia, the purchase of housing (21.18% effort) is more profitable than renting (40.16%). The same thing happens in the Basque Country (20.04% compared to 34.86%), as well as in the Community of Madrid (31.75% compared to 40.36%) or the Canary Islands (24.03% compared to 38, 16%).
As for the territories of rural Spain, the difference is less. The main obstacle in these areas is have previous savings to pay the down payment of a mortgage for the purchase of a home.
Thus, in Castilla y León, citizens would not notice almost no difference between renting or buying a home, since the effort to buy (23.14%) is barely 0.02 points higher than the effort to rent (23.12%). In Aragón (except in Zaragoza), Castilla-La Mancha, Extremadura and La Rioja, they would save about 40 euros per month if they opted for the purchase instead of renting.
Balearic Islands is the only exception
The Balearic Islands is the only region in which an exception occurs, since it is considerably more profitable to rent than to buyespecially due to foreign demand.
According to a study by iAhorro, On the islands, the effort involved in buying a home and getting a mortgage (42.75%) is greater, compared to the effort of paying rent (37.35%). “In general, an average citizen residing in the Balearic Islands would pay 1,179 euros for his mortgage compared to the 1,031 it could cost to rent a flat, which represents a saving of almost 150 euros per month,” they point out.
“In the last few monthswe have seen a clear imbalance with a very strong demand for purchases, national and foreign, with a more limited supply, what is making it the leading community in rising sales prices and in which the effort to buy is already surpassing the rent”, highlights the financial expert. In this sense, it is likely that this difference will narrow in other communities, without going over.