The rental market in Madrid, Spain on 2023 – Recommendations
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Rental market in 2023: what are the forecasts?
The rental market in 2023 is highly influenced by what happened last year 2022, where we saw a drastic reduction in the supply of rental housing and an increase in demand.
As a consequence, rental prices rose considerably.
By 2023, prices are expected to continue on an upward course, as the supply of rental housing is unlikely to increase to alleviate demand.
Economic scenario for the rental market 2022 and 2023
Low supply and high demand cause prices to rise and the real estate sector dedicated to housing rentals is no exception to this phenomenon.
We must take into account the following economic variables which have affected the rental market in 2023.
- Interest rate hikes.
- The rise of the Euribor.
- The increase in the price of mortgages.
Many mortgaged futures took a step back due to the increase in financing costs due to the economic measures adopted by the ECB (European Central Bank), preferring to rent a home while waiting for a more favorable economic environment.
Therefore, the demand for rent in 2022 continued its rise.
While the supply of housing for rent does not show signs of increasing considerably.
The rental market has become complicated, there were even moments of tension in some areas of the most populated and important cities in our country.
The rental price rose significantly in cities such as Barcelona, Alicante, Madrid and Valencia with a year-on-year price increase of more than 20%.
Will the price of housing rise in the rental market in 2023?
The current situation seems to indicate that 2023 will be similar to the previous year. Therefore, it is highly unlikely that rental prices will go down.
One of the main conditions that owners and real estate agents must pay attention to is the 2% limit to update the rental price, a measure approved in March 2022 and which remains in force for 2023.
The limitation approved by the Government influenced the percentage of profitability of the owners when they rent their home, resulting in many owners prefer to sell their property or in some cases keep it empty.
Latest measures for the rental market in 2023
In 2023 the Government began with the approval of a package of economic aid with the aim of slowing down the rental price.
Royal Decree-Law 20/2022 extends the rent freeze to 2023 with the following measures:
- Extension of the rental price increase limit to 2% when updating the contract.
- It extends until December 31, 2023.
- Six-month extension of the rental contracts, as long as they end before June 30, 2023.
Is it Profitable for the owners to rent their home?
Of course yes, without a doubt. Renting your home will give you benefits such as:
- Prevent your property from being left empty with the deterioration that this entails.
- Secure entry.
- Increase your saving capacity.
But like any business, it requires study and advice. If you think of renting, do it with experts and hire a real estate management service that protects your apartment from any eventuality.
If you want to learn more about the real estate rental market and how to rent your home safely, we invite you to read the following articles and visit our YouTube channel
- Leasing contract models.
- What is IVIMA?
- Incidents or damage to property.
- Pets and rental housing.
- What is a bank guarantee?
- How does default insurance work?
- And more
