History of 100 cities: where is it better to pay for rent and where to buy?

In Europe people tend to rent rather than purchase their own property. Learn in which municipalities of Spain it is more profitable to rent real estate, and where to buy.
Renting is more profitable only in eleven locations in Spain.

In most of Spain's large municipalities, it pays more to buy and only in eleven cities is renting the best decision. This is the conclusion made by a study carried out by UVE Valoraciones in which they analysed 107 Spanish cities.

The municipalities in which it is more profitable to rent than to buy are: San Sebastián, Getxo, Sant Cugat del Vallès, Marbella, Palma de Mallorca, Alcobendas, Majadahonda, Pozuelo de Alarcón, Barcelona, La Coruña and Santiago de Compostela.

On the other hand, the cities where the purchase pays off as a first option are: Talavera de la Reina, Murcia, Tarragona, Lleida, El Ejido, Chiclana, Reus, Manresa, Algeciras and Huelva.

Playa Flamenca (Orihuela Costa)
Playa Flamenca (Orihuela Costa)
In another series of municipalities, the profitability of buying and renting is similar. This is the case, for example, in Fuengirola, Orihuela, Rivas-Vaciamadrid, Madrid, Cádiz, Estepona, Ourense, Bilbao, Pamplona, Pontevedra, Gerona, Vitoria, Mijas, Vélez-Málaga, Torrevieja, Benidorm and Las Rozas.

The analysis has been carried out by calculating the mortgage payment corresponding to a loan of 80% of the value of the offer, with a duration of 24.58 years and an interest rate of 1.52%, taking as a reference the average value for June published by the Spanish Mortgage Association, the Idealista prices for sale and rental ads.

With these data, the mortgage payment and the rental payment per square metre are calculated. It is also estimated what percentage the loan payment represents with respect to rentals. If the figure is above 85%, it would be a fairly reliable indicator that renting is a better option in a particular municipality.

Between 75% and 85% would have to be studied on a case-by-case basis and, below 75%, it will almost always be preferable to buy rather than rent.

Where in Spain is it more profitable to buy a property and where it is better to rent ?

Skyrocketing rental prices

As explained by UVE, the sharp decrease in rental offers from June 2021 in the most populated cities anticipates sharp rises in rental prices. This becomes a major obstacle for young people who wish to emancipate, since, in order to buy for the first time, it is necessary to have decent savings to cover the part not financed by the banks.

This shortage of rental supply could mean that, in many cities (Barcelona, Madrid, Bilbao, Getxo, Sant Cugat, Alcobendas, Majadahonda, Pozuelo, Marbella and Las Rozas), the current suitability of renting could change, in a short period of time, to buying as the best option. If this were to happen, there would be very few cities in Spain where renting would be more profitable.
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