Young people leave home late and the main culprit is housing, or rather, homelessness. Emancipation in Spain is at the age of 30. That is three years more than the European average, according to a BBVA Research report.
With youth and housing there is a kind of perfect storm. They are a group with few resources (see attached information) that face a good (housing) that is scarce and expensive.
In the report, BBVA highlights that when emancipation occurs in young people, it is mainly through rent. Almost half of the households whose reference person was under 30 years of age lived in a rented home, compared to just over 30% who did so in a property, the report details.
Renting requires an initial investment that is lower than buying and, among young people, the ability to save, key to buying a home, is usually limited. As a general rule, banks ask clients to assume 20% of the price of the apartment plus taxes (13% of the value of the property). Instead, the mortgage only covers the remaining 80% of the flat. Félix Lore, researcher at BBVA Research and author of the report, reflects that the barrier to entry to purchase is too high.
The rent, although fewer resources are needed, is also usually a considerable investment. The initial tenant is usually charged 10% as a commission, two monthly deposits and the current month's fee. That for an apartment of 800 euros per month is an initial payment of about 3,500 euros. "The weight of rent with respect to home ownership has increased in recent years and it is partly due to young people," says Lores.
The other advantages of leasing a property compared to buying and that seduce young people is the flexibility that you have. Renting favors geographical mobility in the search for better opportunities, highlights the BBVA Research report. Where renting is especially attractive for obvious reasons is in the group of young foreigners.
Once it has been established that renting is the simplest and most affordable formula for young people, the current market situation makes it a complicated option. The report warns that “prices have risen notably. From 2014 to mid-2022 they increased by 50% (compared to 20% of housing for sale). The most relevant promotions occurred in the regions with the highest economic growth and with a relatively younger population, such as the Balearic Islands or Madrid”.
One of the reasons for the increase in prices is "the proliferation of the use of tourist apartments". In very touristic areas, the owner obtains a higher yield with the tourist rental than with the traditional one. Precisely, the provinces with the highest rent increases (Las Palmas, Tenerife, the Balearic Islands or Malaga) are the ones with the greatest supply of this type of accommodation.
All this means that young people must increase the income for rent. In a few provinces it falls below 30%, says BBVA Research. To this must be added the scarce supply of subsidized housing. According to the OECD, in 2020 the social rental offer was equivalent to only 1.1% of the residential stock, much lower than the 30% in the Netherlands and 20% in Austria and Denmark.
Finally, BBVA Research warns that legal uncertainty does not favor the proliferation of rental housing supply.
