The Juan XXIII area unseats Levante as the district with the most expensive rent in Tarragona
The area of clearest urban expansion in Tarragona, such as the surroundings of Joan XXIII, has also become the one with, on average, the most expensive rents. The figure reaches 675 euros, also including the South Expansionwhere roads such as Vidal and Barraquer or the Rambla Lluís Companys are included.
This follows from the data for the third quarter of this year from an analysis by the Chamber of Urban Property of Tarragona. “It is one of the areas with the highest demand and most contracts. At the same time, it is a district with growth”, explains Hèctor Ruana, manager of the Chamber.
Diagnosis is a turnaround Compared to previous quarters, in which Llevant, and also the area of Sant Pere i Sant Pau, led prices by area in Tarragona. The study also includes the general price increase. The lease of an apartment in the capital stands at 611 eurosafter an increase in the last year of 9.6%, practically in line with inflation. The IPC has grown in that time in Tarragona by around 10%, with which the rent has increased but slightly below.
121 euros more than in 2018
But it is not only the soaring cost of living that impacts this. “There is a clear upward trend due to the excess demand over supplywhich is the main reason that makes prices rise in any market", Ruana points out. There is little stock for rent and the competition to get hold of a property has been high for years. Since 2018, the average price has risen in Tarragona by 24%going from 490 euros to 611, 121 more, according to the balance of the Chamber.
There is an average gap of 240 euros between the most affordable neighborhoods and the most prohibitive
The rent has never had such prohibitive values. In 2008, in the middle of the bubble, the standard monthly payment was 533 euros, well below the current scales. «Since then we progressively lowered to 430 euros in 2014 and then start a new stage of growth which returns us to an average rent of 540 euros in 2021, 1.3% more than in 2008, ”explains the report. In this 2022 prices have continued to rise.
The rate increase is not uniform. The Center and the Part Alta add more than 14% more, well above the CPI. At the other end, The Serrallo and the Lower Part register a rise of only 5.1% and Speaker of 7.8%a much more contained evolution. “The socioeconomic level and the type of housing make a big difference. The distance from the center has historically meant that there was less demand in some areas and that also influences the price," says Ruana.
Hence this imbalance, perfectly manifest in the report. There is a gap of 240 euros in the average rent between the districts: from 675 euros in that especially coveted area around the hospital to 435 for a flat in Campclar or Torreforta.
"Excess demand compared to supply is the main reason that drives up prices," says Hèctor Ruana, manager of the Chamber of Urban Property of Tarragona
Another of the significant statistics is the number of contracts signed in Tarragona by income brackets. The signatures of flats that cost between 300 and 500 euros have collapsed 29% between 2018 and 2021. The same decrease has occurred in those properties, much scarcer, below 300. The only section that increases is the range that has become common, which ranges from 500 to 700 Contracts rise 3.3%.
The Chamber indicates that from September 2020 to April of this year the Law 11/2020 on income containment, in which «the rental market in Catalonia was intervened by the administration». These latest increases, then, in the third quarter, may occur as a response to that time of limitation.
“More legal certainty”
Before the chronic shortage of the rental park, the Chamber proposes “stimulating the market by increasing legal certaintyboth by owners and tenants, in the event of non-compliance. Hèctor Ruana adds: «More than coercive measures such as 50% surcharges or the law of contraction, we see it more convenient to gain legal certainty. A bad experience that an owner may have had is then associated with not wanting to rent or preferring to sell. If you have to resort to justice, the resolution can take more than a year.
"Small owners see that there is no framework of trust and they choose to sell and not rent," laments Ferran Font, director of studies for the Pisos.com portal
The other claim has to do with fPromote incentives for the rehabilitation or adaptation of housingconditional on the subsequent rental of that address. “In this way we would favor the entry into rent, especially of those low-end and low-priced homes,” says Ruana.
Ferran Font, director of studies for the Pisos.com platform, also acknowledges that "small owners, who account for 90% of the entire rental park, see that there is no framework of trust." Font adds: “It is a situation of little predictability, of a certain defenselessnessand in the end the owner ends up choosing to sell instead of renting».
The Government's limitation to rent increases protects contracts from excessive increases in the CPI
Beyond the increases of the new contracts that the study of the Urban Property Chamber of Tarragona collects, the other front is the price updates. In October, for the seventh consecutive month, the rentals of homes that have the annual renewal of their rent continue to have a limit to the increase of 2%.
This is due to the cap imposed by the decree of the Government of Pedro Sánchez in response to the economic consequences of the war in Ukraine presented at the end of March, and extended in June until the end of the year.
Since April, the leases signed with a link to the CPI, the indicator most used in lease contracts, they have stopped suffering the exorbitant swings for the cost of living.
A recent report from the Idealista portal indicates that this measure saves an average tenant from Tarragona about 455 euros a yearsince the update of what you have to pay is notably below what inflation grows.
In other words, with this cap imposed, renewing the rent of a two-bedroom apartment in the capital of Tarragona would be a monthly payment of 561 euros per month, and represents 132 euros more per year. What would happen if there were no state intervention and the price review was accompanied by a CPI of around 9%? That the standard price of the property would be 599 euros and, after that rise in the level of inflation, the tenant would end up paying 587 euros more per year. And that only taking into account the figure for September, located at 8.9%, after a summer in which prices posted a year-on-year increase of more than 10%.
Savings figures vary by city. In Barcelona, this price limitation is preventing a tenant from paying 753 euros more per year. In Girona the figure for this simulated extra expenditure would be 538 euros and in Lleida 373, always according to the available balances of Idealista. In Madrid the index scales up to 704 euros.
This restraint benefits the tenants when it comes to negotiating revisions with their landlords, but it does not prevent the properties that go on the market from being able to do so with increases above that 2%.