The successive crises since 2008 have undoubtedly changed the housing landscape in Spain in the last 10 years and, although the mortgage option remains the most popular in a third of households in the State, renting is gaining more and more weight. This is reflected in the 2021 population and housing survey published by the INE this Wednesday and which allows the data to be compared with the previous 2011 census. In this way, it can be seen how, During this decade, the number of foreclosed homes has fallen more than six percentage points., going from 32.9% to 26.4%. On the other hand, rents have followed an opposite trend: from the 13.5% they represented in 2011 they have become 15.9% today.
The situation, however, is not the same in all parts of the national territory nor in all households if one looks at the income of its inhabitants. The option of renting is more common in large cities, such as Barcelona, where the percentage of main households that are rented exceeds 30%. In the same way, it is also the most common option in homes where incomes are lower, while mortgages with pending payments are more frequent when incomes exceed €2,500 per month.
The latest data also sheds light on how access to mortgages has changed in the last ten years and has become more prohibitive for lower incomes. Although the percentage of people who live in a property home with the mortgage already paid off does not differ between incomes —39.3% of households with incomes of less than 1,000 euros are fully paid property, and with incomes of 5,000 euros or more is 40.8%—, the difference is abysmal if we compare mortgaged homes in 2021. So, only 13% of households with less than 1,000 euros paid a mortgagewhile in those of 5,000 euros or more the percentage was more than double —32%.
Mortgages more prohibitive for low incomes
The change in trend is clear and people with low incomes are increasingly finding it more difficult to access home ownership through a mortgage. For Juan Carlos Higueras, financial analyst and professor at EAE Business School, part of this problem is due to the fact that “after the 2007 financial crisis, some banks had to be rescued and others had to transfer their toxic assets (unsaleable properties) to the Sareb, which still remains to be sold, and began to be more restrictive with the granting of mortgages”.
As the expert explained to ON ECONOMIA, the requirements that banks have added in recent years are also an important barrier when it comes to accessing a mortgage. “To open your mouth, now they require you to take into account at least 20% of the appraised value, plus taxes, plus other expensesand that for a low-income family becomes complicated,” says Higueras. “In addition, in theory, the monthly payment to be paid should not exceed 30% of the families’ net income, another aspect that prevents people from with low income can undertake it”
Added to this is the current economic outlook for which the European Central Bank (ECB) has raised interest rates to try to reduce high inflation. A strategy that has made both fixed and variable mortgage loans more expensive over the last year, marked by the war in Ukraine and the consequences for the citizen’s pocket. In fact, The Euribor, the index to which variable mortgages are referenced, has risen 4% in one yearand quotas have grown almost 50% in this period.
In this sense, households with incomes above 2,500 euros are broadly those most affected by the rise in interest rates, but it is a situation that is affecting as a general rule. Influenced by this and other factors of the current economic situation, the number of mortgages constituted on homes in December last year was 30,075, 8.8% less than in the same month of 2021. However, In the year 2022 as a whole, the number of mortgages on homes grew by 10.9% and their average amount by 5.8%. This is the highest figure in 12 years, although the December data is already beginning to reflect a slowdown in this trend, as a possible consequence of rising costs.
“You add the high inflation that leaves us without money at the end of the month and the growth in housing prices and you already have the table set so that low-income families have it more complicated,” the professor points out. Likewise, another of the points that explain the lower concession of this type of credit for access to housing for people with lower incomes, according to Higueras, is that “banks do not want to raise their delinquency ratios”. Measures that entities are accelerating in the current economic context.
As a consequence, more and more low-income families have been forced to rent in the last decade, but prices have also skyrocketed in an increasingly stressed market. According to the Idealista real estate portal, the average rental price in Spain has risen by 9.1% compared to January 2022, up to €11.6/m2. A historical maximum in the data record of this portal. The price rises have affected households with less income above all, since they are the ones who most frequently live in homes with this tenure regime.
Where is more rent concentrated?
In recent years, renting has gained ground in many cities and towns close to large metropolitan areas. This map shows how in the autonomous communities where there are large provincial capitals and in the Canary and Balearic Islands, rental households are more frequent than in other communities where there is less concentration of population.
In Catalonia, 23.2% of households have a rental regime. It is the community with the second highest percentage in the state, only behind the Balearic Islands, where the figures reach 23.4%. It is also in Catalonia where some of the populations with the highest rental rate on the peninsula are concentrated. The INE data also allow us to know the tenure regime of the main dwellings in cities with more than 50,000 inhabitants and provincial capitals.
Of the 151 locations, half exceed the average percentage of rented homes in Spain —which is 15.9%. In some cities, more than a third of homes are even in this regime. In Ibiza, for example, 40% of the main homes are rented, compared to 20% that are mortgaged and 28% that are owned, already paid for. Barcelona, for its part, is the most populated city with the highest percentage of rented homes: 33%. Only 17% of Barcelona households pay a mortgage, and 35% have already paid their mortgage.
In total, 14 Catalan municipalities with more than 50,000 inhabitants have a percentage of rented homes above 21%. A scenario that can also be seen in the Community of Madrid, where seven municipalities also exceed this threshold. In the capital, Madrid, the percentage of rentals is significantly lower than in Barcelona: 24% of homes have this regime, the same percentage as homes with a mortgage. Home ownership already paid for, on the other hand, represents 39%.