The increase in the price of mortgages due to the rise in interest rates has made the purchase of a home unaffordable for the majority of the population in the large Spanish capitals, with the most critical level in the city of Barcelona: the share of an average mortgage would take 51.2% of the family income of its inhabitants, according to the study of local markets prepared by the appraiser Tinsa. In Spain as a whole, the effort rate would be 33%, also higher than in recent years, but still below 35% of income, which is the limit set by financial institutions to grant a mortgage
The theoretical purchase effort, according to Tinsa, is the percentage of disposable income that an average household would have to use to pay the first installment of a mortgage that would cover 80% of the value of an average home at current prices.
This effort also exceeds critical levels in Madrid (46.9%), Málaga (45.8%) and Seville (39.8%) and falls short in Valencia (34.9%). At a provincial level, a critical situation is also experienced in the Balearic Islands, where the payment of an average mortgage would take 57.9% of the disposable income of its residents.
Andrea de la Hoz, senior consultant at Tinsa’s studies service, points out that “places with a high theoretical effort have in common high housing prices and a proportionately lower disposable income of households”. They are areas, he adds, with a great vitality of the real estate market, in some cases because “their labor market attracts a large part of the population from other provinces” as is the case of Madrid and Barcelona. “Changing cities often means temporarily resorting to renting, so the demand for rental investment in those areas is also boosted”, he recalls.
In the case of the Islands, housing has become inaccessible due to tourist pressure. “Buyers – individuals or investors – from other provinces and other countries with higher incomes than local households are looking for a second home” and are willing to pay more, so that in the end “the new homes built are oriented towards this second residence demand with more purchasing power”.
Málaga, in his opinion, lives in an intermediate situation, due to the high weight of tourism in the province, while “the city is growing and its job opportunities are increasing”.
Tourism harms accessibility, because it increases the demand for purchases, but also because it is an activity that maintains many low-wage jobs.
The importance of wages is evident in the city of Barcelona: the district where buying a home is more accessible for its residents is Sarrià-Sant Gervasi, where the initial installment of a mortgage would entail 36.8% of disposable income of its inhabitants, even though it is precisely the district where housing is more expensive: 4,935 euros/m2. On the other hand, Ciutat Vella is the fifth district with the highest prices (3,646 euros/ m2) but is, nevertheless, the most inaccessible of all the large Spanish capitals, with an effort rate that puts the share of the mortgage at 67.5% of the income of its residents. The difference between the two districts is the income of their residents: 33,264 euros per year in Sarrià and only 13,868 in Ciutat Vella.
In Madrid, the most inaccessible district is that of Center, where the purchase effort takes 61.9% of disposable income, followed by Arganzuela (56.7%) and Retiro (50.5%).
“Families living in these districts where the theoretical effort is so high bought the house a long time ago, and with today’s prices and incomes they couldn’t afford a mortgage payment. Those who now buy in these areas, individuals or investors, have an income that is not reflected in the statistics of residents of the aforementioned districts. The rise in rates, which is expected to continue, will exacerbate the difficulties of residents in these tense areas. “If there is no proportional increase in income, these people will see how the final housing price they can afford is reduced.”
