A few months ago, Pelayo and Carla stopped actively looking for an apartment. Discouraged by prices and rising interest rates, the couple decided to continue renting. From this failed process came a few notifications on the mobile phone and the habit of accessing, from time to time, a real estate portal. At the end of the summer, while browsing Idealista, an ad appeared for a house that they could consider as a home in which to continue their life plan. “We called and they told us that if we wanted to see him, it had to be the same afternoon, in an hour and a half,” he remembers.
They attended the meeting, in a process that ultimately ran against the clock. “During the visit they told us that there were already three other people interested: one wanted the apartment to live in and the others were investors, a foreigner and another national who could send them the money the next day and who only wanted it because they We knew that prices in the region were going to increase,” recalls Pelayo. After 40 minutes, the couple convinced the owner, an individual, to give them a few days of margin “to do calculations”. In just three days, they had to make one of the most important decisions, in economic terms, of their lives.
The case of Pelayo and Carla (not their fictitious names), aged 35 and 32, shows a barrier to accessing housing, even for families and young people who can overcome the financial burden. “Our problem is that with economies that are not bad and good salaries, we are in competition with people who want to invest in apartments,” they lament. In 2023, 56.2% of housing purchase and sale transactions in Spain were carried out without a mortgage loan, almost six points more than the previous year and the highest rate since 2015.
After the bursting of the real estate bubble in 2008, the Spanish real estate market underwent a momentous change. “The decision to restrict credit to preserve the financial system severely limited who could take out a mortgage to buy a house,” explains the director of the Housing sector of the Urban Research Institute (IDRA), Jaime Palomera. Since citizens have to live under one roof, the fall in purchase prices results in an increase in rents. “There is the entire low-income population, who often suffered the consequences of the Great Recession, and all the young and old who are emancipating themselves but cannot buy, so a very important business is open,” explains the researcher. .
This, accompanied by favorable tax policies, has led to an increase in multi-ownership across all segments. “The population that already owned properties constitutes, in general, the higher income strata, who tend to have lower housing costs and, therefore, rental housing. This allows them to have greater savings capacity and more income, both from work and real estate, and to acquire more housing,” Palomera analyzes. “It’s a slow process, but it generates a gradual increase in the number of large owners.” In Barcelona, for example, one in four homes is in the hands of a natural or legal person, owning at least eight properties.
As the following chart shows, the total number of homes purchased by businesses each year has remained more or less stable over the past decade. In 2023, there were 63,127, or almost 11% of the total operations executed that year. “The overall data of the common market has not increased significantly, but we must look to the case of metropolitan area X or province Y. There is a problem of population concentration in certain urban groups, like Madrid, Barcelona, Valencia. or Bilbao, which “the price has become very expensive”, explains Marina Asensio, economist at the consultancy firm Afi and originally from Malaga, where “young people are in competition with those who want to buy housing and transform it into tourism or with better-paid foreigners who wish to retire” in the region.
Alejandro, 34, who is looking for an apartment to buy and emancipate after saving for years in his parents’ house, was surprised the first time he was asked if he should take out a mortgage . “Who doesn’t need a mortgage to buy an apartment?” he asked incredulously. In the absence of a greater breakdown of public data, previous visualizations show that more than half of home purchases were made without a mortgage and, of the total, 89% were purchased by individuals.
The experts answer Alejandro’s question. “People who accumulate large amounts of cash. Spain is a country of large landlords, in which a high percentage of people own a second home. Or people who inherit: every day someone dies and the one who dies now has a fairly high accumulated wealth, because he had access to housing,” lists Asensio. A study of his authorship, Demographic, housing and wealth gapspublished this Wednesday by the Afi Emilio Ontiveros Foundation, corroborates that “while the oldest cohorts have recurrently maintained a primary homeownership rate of more than 80%, while systematically increasing the ownership of other assets real estate at levels close to 60%, the younger cohorts have recorded a drastic decline in primary home ownership, from levels close to 70% at the turn of the century, or in the midst of the financial and real estate crisis, to just 32% in 2022.
Economist and KSNET researcher Pablo Tucat adds another actor to this group: “Foreigners with high purchasing power, who also make cash purchases, especially in coastal areas.”
In the group of people who buy for cash, there are also multi-owners who manage their properties without starting a business or business, which are not uncommon. The latest detailed statistics from the IRPF (Personal Income Tax), with data from 2022, show that one in five tax filers with an income between 30,000 and 60,000 euros gross per year has an average income of almost 800 euros per year for the rental. properties which, moreover, increase among the richest.
The entry into the market of players who consider housing as an investment and not as a place to live has caused, according to Palomera, two obvious effects. The first is inflationary. “Until a few months ago there was a drop in mortgage concessions, so while the real demand (for housing) was decreasing, prices continued to increase and, in some places (Madrid and the Balearic Islands), even exceeded those of the bubble. “, indicates the researcher, who emphasizes that “if there was not all this demand for housing as an asset, there would not be this permanent overheating effect”.
The second effect is less measurable, but it is also obvious and concerns greater pressure on individual buyers looking for their first home. “I’ve been looking for months and the apartments are flying away. We don’t have time to think and I’m afraid that when I find something I like, I won’t be able to choose it because of the rush,” laments Alejandro. Pelayo and Carla have already overcome this stage, but they describe an extreme pressure scenario. “We had three days to do the math, calculate how much money we had, how much our parents could lend us, contact a renovation company and ask for an approximate budget… And then we were overwhelmed by what everyone tells you: ask for the minutes of the last neighborhood meetings, proof that the building has passed the technical inspection, if you have looked at the pipes… It’s impossible, of course we haven’t looked at it. “We’ve been in the house for 40 minutes!” he remembers.
13% of ads disappear in less than a week
According to Idealista data, 13% of the accommodations published on the portal during the third quarter of this year were not advertised even for a week. The study shows that this rate is much higher in provincial capitals such as Granada (25%), Girona (22%) and Pamplona (20%). In Madrid, 18% disappear in seven days, one point more than in Barcelona.
“Families have the right of entry, but they compete with players who do not need a mortgage, speed up the procedures, pay in cash and can even pay a little more. Furthermore, in many cases, they hardly even need to visit the house, because they view it as an asset, unlike a family who may need to go there five or six times, because it is the most important decision in economic and emotional terms. their lives,” Palomera explains.
For Tucat, the participation of legal entities in the real estate market “is not necessarily negative”. There are examples, such as housing associations, management models based on non-profit organizations that operate successfully in other countries, such as Austria, Canada or Denmark and whose expansion in Spain is still minimal. “The concern arises around a specific type, which are private companies, investment funds or Socimis, which are not intrinsically bad, because they can bring profits on a theoretical level, but which are linked to a clear symptom of housing commercialization, which is a form of housing commercialization. is at the heart of many price-related problems,” believes the economist.
