Are the rental price increases starting to peak in Malaga?

Rental prices are slowing down in Malaga. There are already signs of this in the latest statistics published by real estate portal Idealista in Spain. The province is the fourth most expensive province for renting: 16.70 euros per square metre per month is only surpassed by just over 20 euros in Madrid and Barcelona and 19.70 euros in the Balearic Islands. That figure for Malaga is beginning to weigh against the upward trend. Now the Costa del Sol is no longer among the places where renting is most expensive in Spain. In the last month the increase in rental prices has been just 0.2%, compared to increases of more than 4% in Teruel, more than 3% in Lugo and Jaen and more than 2% in a good handful of provinces, including other Andalusian provinces such as Almeria and Huelva.

Still, we should be cautious about this news because, across Spain as a whole, rental prices fell by 0.5% in July compared to June, to an average of 14.60 euros per square metre per month. In Soria they fell 4.5% and in two territories with very demanding prices (Barcelona and the Balearic Islands), they fell by more than 2%.

Looking at year-on-year figures, rental prices in Malaga province have registered an increase of 9.2% in the last 12 months, below the Spanish average of 10.9%. As a result, the rate of increase is no longer one of the strongest in Spain, another indication that prices may be close to reaching their ceiling. Currently, the baton has been passed to smaller, cheaper provinces such as Teruel, Zamora and Segovia, where increases are around 20% compared to the levels of 12 months ago, while in Guadalajara and Toledo the increases are around 14%. Malaga, in the ranking of provinces ordered by price increases over the last year, is right in the middle of the table with as many places ahead as behind it in terms of rental increases.

Within the province, the cooling of rent increases is being most acutely felt in Malaga city. For starters, Malaga city is among the 20 or so provincial capitals where property rentals in July were somewhat cheaper than in June. Note that these are the advertised prices, the asking prices coming from the landlords, as this is the data published by Idealista. So, in the Costa del Sol capital, rents fell by 0.2% in July, while in Soria the decline was 5% and in San Sebastian and Barcelona, two capitals that stand out for their high prices, it fell by 2.2%.

Even so, Malaga, with its 15.60 euros per square metre per month, is the fifth most expensive capital city in Spain, behind Barcelona and Madrid (23.40 and 22.10 euros per square metre per month) and San Sebastian and Palma de Mallorca (both slightly above 18 euros per square metre per month). Therefore, this state of affairs is beginning to weigh on the city, and more so than on the Costa del Sol province as a whole, given that the city's rent increase is 7.3% in year-on-year terms, placing it almost two percentage points below the provincial average and more than 3.5 points below the national average (the aforementioned 10.9%).

The sharpest increases in the last year have occurred in the cities of Segovia (22.7%), Zamora (19.4%) and Tarragona (17.2%).

Within the Andalucía region, there are now other provincial capitals where the rate of rent increases are also higher than in Malaga: Jaen (+10.8%), Huelva (+9.4%) and Seville (+8.6%).

These figures, which show that rents in the province and in the capital of the Costa del Sol are beginning to show more moderate increases, are consistent with others published this week by Idealista. They indicate that the province is the one where residents have to make the greatest effort to pay the rent: the percentage of household income needed to rent an apartment is 55%. That news places Malaga ahead of the Balearic Islands, where renting a home swallows up 52% of disposable income, and Barcelona (42%). A slowdown in the rate of rental increases has also been visible of late in these two provinces. On average, renting in Spain accounts for 38% of household income, a percentage that slightly exceeds what is recommended by financial experts and international organisations: the cost of housing should not account for more than 30% of a household's resources.

However, even after the latest price increases in provinces such as Teruel, Lleida, Ciudad Real and, closer to home within Andalucía, Jaen, rent accounts for no more than 20% of tenants' income.

If, instead of talking about the province as a whole, we look solely at Malaga city, we discover that, according to Idealista data, it is in third place on the list of Spanish cities where rent takes up the highest percentage of income at 42%. Only Barcelona (44%) and Palma (43%) are ahead of Malaga.

Francisco Iñareta, spokesperson for Idealista, stated that the data showed that the rental housing situation is one of being an "emergency" and that it is "close to overflowing in many locations." He also noted that developments in the rental market are driving many people to buy an apartment and that this, in turn, is putting pressure on the purchase market. Thus, purchasing a home in Malaga city and meeting the mortgage repayments accounts for 37% of household income (a proportion surpassed only by Palma, with 43%). Meanwhile, in the province, the rate of effort (proportion of income going to housing costs) rises to 44%, a figure equal to the Balearic Islands. Both are in the lead.