Spanish politicians call for rent controls in Barcelo...

Rental prices are continuing to race ahead across some of Spain’s main cities, led by gains in Barcelona and Madrid, where politician are starting to call for rent controls.

The city administrations of both Barcelona and Madrid recently called on the national government to amend the rental law to control rents and stop pricing out locals, reports the Spanish press.

Cushman & Wakefield forecast that average residential rental prices will increase by 10% this year in Madrid, and 5% in Barcelona, whilst new figures from the Spanish property portal Idealista.com show that rental yields are also rising, implying that rents are rising faster than house prices.

Mark Stucklin of Spanish Property Insight sad: “There has been a slew of news reports in recent days concerning the sharp increase in rental prices in Barcelona and Madrid, amongst other Spanish cities. This has got local politicians in a lather about tourist demand for accommodation pricing out locals, and the gentrification of some areas as investors upgrade the housing stock and ask higher rents as a consequence.”

But Stucklin points out that Idealista’s figures are based on listings in its database of both rental and sale asking prices, which means “they should be taken with a pinch of salt”.

But for what they are worth they reveal that average yields rose to 6.3% last year, up from 5.5% the year before.

The highest yields were to be found in the Catalan provincial capital of Lleida and Las Palmas de Gran Canaria (both 7.1%), followed by Huelva (6.7%), Málaga (6.3%), and Alicante (6.2%). In Madrid yields were 5.9% and 5.5% in Barcelona.

“Looking at these figures, however, Stucklin said he “can’t help be a bit sceptical”.

“I have reason to suspect that average rental yields in a city like Barcelona are not as good as Idealista suggests,” he added.

“But even if they aren’t as good, they still offer much better returns to small and big investors alike than fixed income and other common asset classes, with 10-year Spanish Government bonds paying something like 1.4%. Is it any wonder that investors are no piling into Spanish real estate?”