The arrival of the Covid has put an end to the euphoria that was experienced in the rental market in large cities such as Madrid, where a well located and in good condition apartment could be rented in just a few hours or at most in a few days.
Competition for the best homes available has dropped dramatically, to the point that now the mean is close to 40 days. This is what Sergio Zurdo assures, Director of Studies of the Rental Negotiating Agency (ANA), that explains that “Before the start of the pandemic, there was strong tension in the rental market” that led to this speed in closing operations.
“Now, in a market that has known how to regulate itself, supply and demand are more balanced, prices have dropped, and it takes on average between 35 a 40 days to rent a home”, explains the manager.
The rent will continue to get cheaper in the Community of Madrid until the month of September
The truth is that Covid-19 has strongly shaken the home rental market in Spain and its consequences will still be seen during this year. Before the pandemic the market was “heavily stressed, with a very scarce housing supply, with a high demand with a ratio of between 8 and 10 candidates by housing, little mobility and rising prices”. Now the situation has completely changed and according to the data obtained by ANA, on a sample of houses in the Madrid's community, on average prices have dropped by 5,95% in the last year, reaching discounts of 8% and of 10% in the highest incomes, explains the expert.
According to Zurdo, “the price trend for the next few months is that the price will continue to fall until the third quarter of 2021, date of a new normal, which will cause prices to begin to stabilize”. “Keep in mind that the cause of the drop has been caused by the Covid-19 crisis, causing the most affected owners to put vacant homes for rent in order to have an extraordinary income that would allow them to better cope with the pandemic. It is increase in supply has caused a drop in prices, because the demand for housing has not increased”, Lefty points.
Where do prices fall the most?
ANA has selected 20 homes in the Community of Madrid that were rented in 2019 and that due to the crisis the contracts had to be resolved, and have been re-rented throughout 2020. In these cases there is a general drop in prices “and this decrease is much greater when we find more expensive homes and in general when they exceed the 1.000 euros, with decreases of 10%”, says the director of Studies of ANA.
“Analyzing each case we have also observed that the biggest price drops have occurred in small and dilapidated homes, that obviously now have more competition as there is more supply, and to be able to be rented, they need to lower their rent much more. The houses below 500 euros have hardly suffered falls, since this price has a high demand and is a fairly affordable price for the vast majority of tenants”, aim.