(Bloomberg) -- Rents in Spain have jumped to record levels, propelled by gains in the country’s two largest cities as higher interest rates roil property markets across Europe.
January rents in Barcelona soared 25% from a year ago and jumped 12% in Madrid, according to data published Monday by Idealista. Soaring demand has driven rents across Spain to a national average of €11.6 per square meter, the highest since one of the country’s main real estate websites started compiling the data in 2006.
The soaring rental costs are a fallout of higher interest rates. Home ownership is the traditional option for most people in Spain, but increased financing costs are pushing residents more toward the rental market, where supply is tight.
Barcelona and Madrid were the two most expensive cities. Price per square meter in Barcelona jumped to a record €19.8, while Madrid climbed to €16.5, according to data from Idealista.
Similar trends were evident in data released in advance to Bloomberg by Fotocasa. Rental rates have been rising for 11 months in a row, and most cities are at their highest levels since the real estate site began tracking the data in 2006. Vacation hot spots are also seeing a surge in demand, with Malaga rents surging 31% and Palma de Mallorca jumping 24%, according to Fotocasa.
About 24% of people in Spain rented their homes in 2021, according to Eurostat. That’s below the European Union average of 30.1% and less than half Germany’s share of tenants.
Buying a home will become increasingly expensive in Spain this year. Selling prices are also at record highs even as mortgage rates rise. The combination is likely to further increase demand for rental properties in the coming months.
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