The increase in the cost of mortgages due to the rise in interest rates has made the purchase of a home inaccessible for the majority of the population of the large Spanish capitals, with the most critical level in the city of Barcelona: the payment of a average mortgage would take 51.2% of the family income of its inhabitants, according to the study of Local Markets prepared by the Tinsa appraiser. In Spain as a whole, the effort rate would be 33%, also higher than in recent years, but still below the 35% of income, which is the limit set by financial institutions to grant a mortgage.
The theoretical purchase effort, according to Tinsa, is the percentage of disposable income that an average household would have to allocate to pay the first installment of a mortgage that would cover 80% of the value of an average home at current prices.
This effort also exceeds the critical levels in Madrid (46.9%), Malaga (45.8%) and Seville (39.8%) and borders on it in Valencia (34.9%). At the provincial level, a critical situation is also experienced in the Balearic Islands, where the payment of an average mortgage would take 57.9% of the disposable income of its residents.
Andrea de la Hoz, senior consultant at the Tinsa Studies Service, points out that "locations with a high theoretical effort have in common high housing prices and proportionally lower disposable income for households." They are areas, she adds, with great vitality in the real estate market, in some cases because "their labor market attracts a large part of the population from other provinces" as is the case of Madrid and Barcelona. "Changing cities often involves temporarily resorting to renting, so the demand for rental investment in those areas is also boosted," she recalls.
In the case of the Balearic Islands, housing has become inaccessible due to tourist pressure. "Buyers - individuals or investors - from other provinces and from other countries with incomes higher than local households are looking for a second residence" and are willing to pay more for them, so that in the end "new homes built are oriented towards this demand second residence with higher purchasing power”.
Malaga, in his opinion, lives in an intermediate situation, due to the high weight of tourism in the province while "the city grows and its job opportunities increase." Tourism harms accessibility, because it increases the demand for purchases, but also because it is an activity that maintains many low-wage jobs.
The importance of salaries is well seen in the city of Barcelona: the district in which buying a home is more accessible for its residents is Sarrià-Sant Gervasi, where the initial payment of a mortgage would take 36.8% of the disposable income of its inhabitants, although it is precisely the district where housing is more expensive: 4,935 euros/m2. On the other hand, Ciutat Vella is the fifth district with the highest prices (3,646 euros/m2) but it is nevertheless the most inaccessible of all the large Spanish capitals, with an effort rate that places the mortgage payment at 67, 5% of the income of its residents. The difference between the two districts is the income of their residents: 33,264 euros per year in Sarrià and only 13,868 in Ciutat Vella.
In Madrid, the most inaccessible district is Centro, where the purchase effort accounts for 61.9% of disposable income, followed by Arganzuela (56.7%) and Retiro (50.5%).
“The families that reside in those districts where the theoretical effort is so high bought the house a long time ago, and with current prices and income they could not afford a mortgage payment. Those who buy now in these areas, individuals or investors, have an income that is not reflected in the statistics of residents of said districts”. The rise in rates, which is expected to continue, will aggravate the difficulties of residents in these stressed areas. “If there is not a proportional increase in income, these people are going to see the final price of housing that they can afford decrease.”
