The prices of the rents diminish the interest by the purchase between the young people
The interest in renting a home for young people has fallen drastically since last year. Among young people aged 18 to 34 there is a decline of 9 points that goes up to 14 when we talk about young people from 18 to 24. The rise in rental prices is the main problem that young people do not think about renting a home. In general, the rental price has risen by 8.9% while the sale of second-hand housing has increased by 5.1%.
Interestingly, according to the data of the X-ray of the housing market 2017-2018 of Fotocasa , the number of rental contracts has decreased this last year, but there has been no increase in the purchase, which remains. People who have ceased to be interested in rent simply do not rent, but this does not mean that they go through the purchase.
For Juan Pedro Caro , CEO of Templo Consulting , the low participation of young people in the purchase is caused by the difficulties to find financing in banks. The lowest wages of the post-crisis period are joined by the banking policy of not offering financing for more than 35% of what is earned in net. In addition, it is necessary to have saved at least 30%.
According to the INE , the average net salary in Spain was 1,178 euros last year, which means a maximum fee from € 412.30. Young people, on the other hand, have lower average salaries, which makes it impossible for them to get a mortgage. Not in vain, the index of Fotocasa states that more than half of new buyers are over 55 years old.
For Caro , it is usual In your real estate consultancy find buyers over 55 who, in reality, are buying floor for their children. Especially in large university cities such as Madrid , Barcelona , Seville and Valencia . In this way they get a place where their children can study and start their working life and pay the expenses with the rent of the other rooms of the house.
In 2018 fewer houses are bought than in 2017
Even so, the price increase has also caused this type of purchase to fall. Of the 28% of the population that participated in the housing market in 2017, this year the percentage has been reduced to 23%. Keep in mind that the study of Fotocasa only takes into account the market of individuals, which is why the operations of banks, socimis or investment funds are not part of the analyzed data.
One of the most interesting data of the study is that the perception of the danger of a real estate bubble has increased. In total, 36% believe that we are close to a new bubble compared to 26% who thought about it last year. This also implies that there has been an increase in purchase between the middle and lower middle classes while the acquisition of real estate by the upper class has declined.
For Juan Pedro Caro , the highest rents took advantage of the years of the crisis and the beginning of the recovery to do their buying and selling operations and get the most out of it. Now that the possibility of a new bubble is approaching, they have stopped doing so many operations while the middle and lower middle classes have taken the purchase as a pension plan, hoping that the increase will continue.
Aun thus, from Temple Consulting it is reiterated that the situation is far from resembling that of the real estate bubble .It is, in fact, in Catalonia and the Comunidad de Madrid where the number of rents has decreased the most this 2018, while the two regions where the rise of prices has been higher. In most of the interior communities, prices remain or are even declining. According to the Tinsa report for the first quarter of 2018, provincial capitals such as Zaragoza, Oviedo, Pontevedra, Lleida, Ciudad Real, Cáceres or Guadalajara are experiencing significant declines of up to 10%. We are, therefore, facing a Spain at two speeds.
One of the biggest curiosities that come from this Fotocasa studio is that 86% of the population considers itself the owner of a house. However, only 66% really is. This 20% difference corresponds to family members, especially children between 18 and 34 years of age, who consider themselves to be owners, even if they belong to their parents. It is a feeling that increases as independence becomes more difficult.
The disinterest of younger people in the purchase is behind the poor reception of the new proptech real estate models, which operate solely from online form and which have their target public potential among young people. For the CEO of Templo Consulting, the key is to change the distribution method, so that the seller is reached through channels that offer confidence in advance. After more than five years of experience in the sector, Caro asserts that only by combining technological innovations with a fixed and economic price and a well-known channel, can the industry be transformed and the confidence of those new players who refuse to enter in the real estate market.
Author article: Temple Consulting .