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Rental prices in Madrid

Madrid has gradually become the most important Spanish city next to Barcelona in regards to the rental market. Beyond continuing with the upward trend that was enjoyed during 2017, in which historical records were reached, it can be said that the future prospects are really positive. In this article, we are going to talk to you about everything related to the rental prices in Madrid so that you can get a better idea.

The average rental prices in Madrid exceed the national figures

We must refer to the data provided by various estate agencies' websites to verify that, in general, the year 2017 has been historic in terms of the rental market in the capital of Spain. Specifically during the last twelve months, the rental price in Madrid has experienced a rise of 6.3%. This is a positive figure that has guaranteed to generate good profits for many investors in the property market.

At the beginning of 2018, the price per square metre for a Madrid property for rent has reached 11.45 euros. If we take a look at the national average, we will see that it is placed at 8.15 euros per square metre per month. This means that right now the value of property rentals is 40.6% more in Madrid than in the rest of Spain.




Madrid - Alquiler en Madrid

Foto: © Engel & Völkers Madrid

However, Madrid is not the most expensive community in Spain when it comes to renting a home - Or at least, it is not the most expensive yet. Catalonia takes the first place in the ranking with an average price of 12.39 euros per square metre per month. In third position, just after the capital of Spain is the Basque Country, which has seen rental prices grow up to 10.70 euros per square metre.

Based on these figures, we must say that September 2007 was the month the historical maximum was reached in terms of the average value of per square metre. Specifically, the figure was 11.81 euros, which implies that, at the moment, we are still 3% below the expected figure.


Is this growth typical of the capital or does it also occur in the province?

It is not just the historic centre of the city of Madrid that is experiencing an upward trend in the rental price. Currently, 16 out of the 23 municipalities that make up the province are enjoying a more or less noticeable growth. The one that has seen the most increase is San Lorenzo de El Escorial, with 18.4%, while at the bottom of the list is Parla, with 4.1%.

However, the historical centre of the capital of Spain remains one of the most expensive areas in the entire autonomous community. Specifically, a house is worth, on average, 13.22 euros per square metre. On the opposite side is the municipality of Alcorcón, which has experienced a reduction of 11% in rental prices. This has led to the average rental price to currently stand at 7.16 euros per square metre.






An in depth look into the average rental price in the capital

However, the winning cards in terms of annual growth are in the hands of Madrid's Chamberí district. In fact, currently, property for rent has reached a price of 16.41 euros per square metre per month in this area, which implies an increase of 101.3% more than the national average. This means for the third consecutive year, this popular neighbourhood is the most expensive in the entire capital.

The annual rental increase in the Chamberí district is clearly not as pronounced as it has been in other areas. In fact, at the top position is Hortaleza, which has seen growth of 13.1%, followed very closely by Puente de Vallecas, with 12.9%. Further back is 11% in Ciudad Lineal, 9.4% Usera, 9.1% of Retiro and 9% of Tetuán.

In the bottom list with falling prices, special mention deserves to go to the central district. At the beginning of 2017, the price per square metre for rental housing was at 14.94 euros, while, at the moment, it stands at 13.13 euros. This means that the decrease has been 12.8% up to now.


Why is this bullish trend taking place in Madrid?


There are several reasons why there is currently an apparent upward trend within the rental market in Madrid. The first reason is due to Madrid's locals who are unable to obtain a mortgage because they are not able to meet the requirements by the banks, despite the fact that more banks are granting mortgages again.

We must not forget that most lending companies are currently not only requesting guarantees about the long-term financial situation of the applicant, but they also ask for a 20% deposit from the applicant. The borrower must also pay for the property taxes, legal fees, etc. For example, in order to buy a house for 150,000 euros, at the time of signing and exchanging contracts between 40,000 and 45,000 euros must be made available by the borrower. The lack of property purchasing power is therefore not a trivial issue in this matter.

But there are other reasons that explain why the average price of rent in Madrid has reached such high levels. We are currently experiencing low interest rates on mortgages, which can only increase the interest of investors who want to buy to let a property. This is why the profits obtained from buy to let is very high.

We should also not forget that the Madrid's locals and, in general, the Spanish population are changing their mentality and are showing more preference towards renting than purchasing. All this, together with the tourist rental boom that the capital is experiencing, explains what we are seeing today.

Conclusions about rental prices in the capital


Although it may sound surprising, but during the month of January 2018, the average rental price in Madrid stood at 1829 euros. Having analysed this data more in depth, we have found that homes of less than 60 square metres had an average value of 807 euros, while those between 60 and 90 square metres reached 1056 euros. However, for properties with more than 90 square metres, which there are plenty of in the capital, the price rose to 2558 euros.

With these data in hand, it is obvious that renting a house in Madrid is currently quite expensive. But at the same time, for those who have sufficient capital to invest in the property market, it is an undeniable opportunity. In addition, this trend is expected to continue to rise throughout 2018 and beyond.




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