Housing in big cities: where is it better to buy and where to rent?

A year ago, there was only one city in Spain in which, in two buildings with similar characteristics located in the same area, but one owned and the other leased, the payment of a mortgage payment by the owner was higher than the cost of one month's rent by the tenant.

Twelve months and three interest rate hikes later, the panorama has changed somewhat: in 100 of the 112 most populated cities in the country, the quota has risen more than rental prices, with the consequence that, currently, There are already 11 cities with higher monthly mortgage payments than lease payments, and four of them are capitals: San Sebastián, Palma de Mallorca, A Coruña and Pamplona.

The Basque city is, in fact, where there is the greatest difference between the payment of the purchase and the rental, of 124.3%. Put into practice, with the two similar properties: the first, owned by the family that inhabits it, has a mortgage of 1,243 euros per month; while the second, leased by another, supposes a rent of one thousand euros per month.

Of course, this does not mean that only in these eleven cities is it more advantageous to rent than to buy, given that the amount of savings necessary to pay the entrance fee for a property is not within everyone's reach.

For this reason, the appraiser Uve Valoraciones has produced a report in which it analyzes whether it is better to buy or rent in all these cities, with a clear conclusion: in 71 of these 112, that is, 63% of them, it is better to rent, since in them the expense in the mortgage payment in relation to the expense in rent exceeds 75%. "A percentage higher than 85% is a fairly reliable indicator that renting is probably preferable to buying. Those whose percentage is between 75% and 85%, although it is not as obvious as in the previous ones, it does seem that the option renting continues to be more favorable and below 75%, buying will almost always be preferable to renting," the report explains.

Among the cities that are above 75%, are the majority of the ten that have registered the highest number of sales in Spain so far this year: the aforementioned Palma de Mallorca (112.1%) is followed by Madrid (97.6%), Torrevieja (86.3%), Barcelona (86.8%), Seville (79.6%), Malaga (78.5%) or Zaragoza (77.4%). But in three of those ten, just the opposite occurs, that is, it seems more advantageous to buy than to rent. This occurs in Valencia (62.5%), Murcia (57.5%) and Alicante (51.8%).

Not by chance, these are three key destinations for Spanish sun and beach tourism. In the areas most stressed by tourism, the rental price has grown so much in the last year that the option to buy has gained many integers.

It does not happen, in any case, in every tourist city: renting in Barcelona, ​​a paradigm of a city with a real estate market stressed by tourism, had never risen as much as 24.8% in the last twelve months, and even so the appraiser recommends buying instead of renting. "We must not forget that the main obstacle for those who buy is the need to have savings. This is the main obstacle for young people," says Germán Pérez Barrio, president of Uve Valoraciones. For this report, the appraiser has taken into account a mortgage payment of a loan of 80% of the value of the offer with a term of 25 years and an interest rate of 3.5%, as well as Idealista's rental prices.