Investment in housing remains one of the most attractive in the environment of rising rates. Rental profitability stood at 6.27% nationally in the third quarter, with the highest figures reaching 8% among the autonomous regions, according to a report by Pisos.com presented this Monday. By city, second-tier capitals have the best returns, although investment is concentrated in Madrid and Barcelona due to the security they offer to the owner.
Buying a typical home of 90 square meters represents an outlay of 188,010 euros on average and renting it brings in about 983 euros, 11,804 euros gross per year, according to data from the real estate agency. The relationship between the purchase price and the rental price determines the profitability. With an average gross rate of 6.27% in the third quarter, "investment in housing continues to be interesting," says Ferran Font, director of studies at the portal. The data remains almost the same as a year ago (6.23%) and the previous quarter (6.35%).
Mainly because the market remains tense. "The imbalances are still present and are increasing. Demand from rentals and from purchases are growing," argues Font. The increase in interest rates has made mortgages more expensive and closed the doors of ownership to many, who fall into the rental market. Added to this are previous factors such as international demand, seasonal demand and "the departure of apartments from the market due to the lack of stable regulation", which leaves high demand and a shrinking supply. Although decreases in sales prices are expected for the last quarter or 2024, according to Font, it is much more complicated for this to occur in rentals.
The differences appear when going down to the autonomous level. Castilla-La Mancha achieves the best returns (7.64%), followed by Extremadura (7.39%) and Aragón (6.83%), since they combine attractive purchase prices and a demand for rentals that pushes the monthly income.
When dealing with real estate, we always speak in terms of gross profitability. To reach the net amount, you must subtract expenses such as maintenance and repairs, community expenses, taxes, contracting insurance - such as anti-occupancy insurance or to protect against non-payment - and other types of contracted services.
Lagging behind in returns, either due to very high housing prices or due to low rental demand that leaves rents low, are La Rioja (3.98%), the Basque Country (4.05%), Navarra (4 .2%) and Asturias (4.21%).
If you look down at the main capitals, Murcia (7.28%), Valencia (6.58%), Las Palmas (6.58%) and Toledo (6.27%) are the most profitable to buy and then rent, all of them above the national average. If the top positions are surprising, it is because we have to review the balance game, "the relationship between initial investment and the income that can be obtained," says Font, and the evolution of the purchase and rental price. Thus, in some markets there is more sales supply, which lowers purchase prices and the cost of housing. But at the same time, as in the best positioned autonomies, they have good rental demand.
The big ones like Barcelona (6.21%) or Madrid (4.92%) are below, especially the second. They combine high purchase and rental prices, which sacrifices some profitability, but in exchange, more security is achieved in obtaining tenants. Hence they are "the epicenter of investment." "They are very safe, as there is little supply and a lot of demand. In less than a week you already have candidates, you can even select them," says Font. This allows you to opt for maximum profitability, forcing you to look for more careful tenant profiles - they cause less damage and expenses to assimilate - and with a good financial profile - less possibility of default.
Among the rest of the important cities, Zaragoza (6.17%) and Seville (6.07%) are also above 6%, while Oviedo, Valladolid, Málaga and Girona exceed 5%.
In some capitals rental prices are skyrocketing - with increases of more than 20% in the Balearic Islands - but that does not mean that more is earned, because sales prices also rise in a similar proportion, "which leads to a significant initial investment" and less profitability. In Palma the profitability is 4.6%, in line with the 4.5% in the Balearic Islands.
It is also not so worthwhile in Pamplona (4.42%), Bilbao (4.75%) and A Coruña (4.76%), which close the list due to the high cost of housing.
