Idealista vs. Promotion: Who is right about the average price of rentals in Spain

This article was written and published in Spanish and has been translated into English via Google Translate. Click here to read the original article.

Official figures for the real estate rental price in Spain, according to the Ministry of Development in a newsletter called the Housing and Land Observatory that has just leaked to the media, 819 euros in the Community of Madrid and 769 in the Community of Barcelona. There is only data from 33 of the 50 provinces, but most of them are important in terms of rental price.

The price comes from the provincial average of the amounts of the 487,470 bonds deposited by the leases throughout 2018 (not the amount of bonds of old income or previous years). In most of the autonomous communities, there is an obligation for the owners to deposit a bond equivalent to one month's contract with the autonomous housing agency.

As the experts warn, there is no follow-up that this amount deposited is exactly the same, and in addition many individuals directly keep the deposit for them without going through the official bodies, but in the majority of rentals managed by real estate agents, agencies or socimis It is accurate.

But what happens if we look at the price of housing according to Fotocasa or Idealista, where there are approximately 70,000 properties uploaded every month? If Fomento said that the average price of the square meter for rent in Madrid is just over 10 euros, Idealista passes it to more than 14. In Catalonia, one calculates it at 8.3 and the portal at 13.8.

In the same trend as these portals, and in a recent article with data from Mitula Group from June 2018, the average cost of a home in Madrid is 1,611 euros, while in Barcelona it is 1,651. The floors cost double. Idealista has pointed out that in all of Barcelona there are only 33 floors of the 8,400 ads on their website that fit within the price that the agency has announced.

This gigantic difference in results in what the rental costs to the Spaniards is not a trivial matter. Since so far, Spain has not had official price indices, it is logical that the latest study on access to housing of the Bank of Spain has been based entirely on Idealista data, and all this has an impact when taking public policy decisions. There is a lot at stake depending on whether that average rental in Madrid is closer to 800 than to 1,600. So who is right? Who is closer to the reality of what the Spanish pay for their rented apartment?

Points to believe in the real estate web portal

First the Idealista version.

Idealista adheres to figures month by month, while the Ministry has made an average of all 2018, with what is possible that in recent months there is a price increase that does not reflect the ministerial body.

On the other hand, Idealista's are output data, not final price. It is what you would like to charge the owner. The real estate portal ensures that in reality the final price is much closer to yours than that of Development because “anyone who has sought a rental in Madrid or Barcelona in recent years has proven that the negotiating capacity of tenants is practically zero” . There are many articles in the press in the last two years about the adventure of hiring a rental without being lifted in less than 24 hours, or with owners who ask for unassuming amounts of bail for the majority.

They also point out that the statistics of the Ministry are incomplete because of the huge amount of rent in black that exists, and that logically it is not included in the report of the ministry but that it can be seen in the Idealista or Fotocasa ads.

Why what the promotion says is more important

But, as sources in the sector point out, Idealista's average is also falsified. The portal averages the active ads on the page, and does not take into account the entire volume of floors at an excessively high price but that is not placed. These ads for immovable expensive apartments increase the average price of the square meter of each city. The same price increase causes the luxury flats of the big cities, which normally remain longer offered until they find a buyer.

In the case of Development it would be interesting to have both an analysis of monthly prices instead of annuals and by cities instead of provinces. It would also be very useful to have the median rent in an area, and not simply the average. Idealista could also include the latter statistic to his monthly publications.

"Although they are very biased data and that by themselves do not say much, those of the Ministry are more real," says Alejandro Inurrieta, who was President of the Public Rental Society (SPA) and is currently an advisor to Inurrieta Integral Consulting. "Idealista's are supply data, and the real money index that has decided to pay by demand will always be more reliable,"  he explains. “Of course, in either case the data is misrepresented, one up and one down. In reality there are very few people, on the total rental housing, who deposit the bonds in public bodies."

Inurrieta points out the conflict of interest of digital portals when it comes to reflecting objective figures, and it is that the turnover of these companies depends on the market moving:

Contrary to what people think, in the housing market there is no more demand when the price is lower, but the other way around: there is more demand when the price is higher. Both in the purchase and in the rent. This works like this, if I have an apartment and I see that the floors are low, I don't put it on rent because my profitability would be very low and I'm not interested. I would put it on rent when it is higher. Therefore, these portals are interested in both the purchase price and the rental price being very high, so that people are encouraged to buy or rent, and that is why their commercial activity grows when demand is on the rise and not at reverse. So yes, they are interested in heating the market.

“Right now I dare to say that there is no one who can say what is the real average price of rent in Spain. There is very little information, and this market is especially opaque because there is a lot of money in black."

And why the apartments in Madrid being worth 800 or 1,600 euros is a secret

According to the advisor and other experts it would be very important that there were real figures, starting with the number of people living in rental apartments, something that "we still do not know", or that a mandatory registration was carried out by the municipalities on rental housing and its contracts, as in other countries around us.

For example, and according to a study prepared by flats.com from the Annual Survey on the Wage Structure published by the INE in June, the average rent stands at 780 euros per month, equivalent to an investment of 40.4% of salary, well above 30.3% a year ago. According to another survey for the INE, the percentage of households that live on rent already reaches a peak of 16.9%, double that of 15 years ago, and almost half of them do so because they cannot afford to buy the apartment.

Only from there and with an official registry of rental prices such as the one that already exists with the sale of real estate could the relationship of the average or medium rental price in each region be assessed with their salaries to know where it is more urgent to build public housing for rent or carry out some other type of public policies.

This article was written and published in Spanish and has been translated into English via Google Translate. Click here to read the original article.

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