Luis Jardí, a 55-year-old executive search consultant, had been living in Barcelona for 21 years. Despite having a good job, he was unable to afford housing in the city due to the rising rental costs. When Jardí first arrived, his rent was 20% of his income, but it had recently increased to nearly 40%. The high cost of living made it difficult for him to comfortably reside in Barcelona, so he made the decision to leave and return to his hometown.
Jardí’s situation is not unique in Barcelona. The city’s popularity as a tourist destination has driven up rent prices. In fact, the average rent per square meter in Barcelona increased by 25% in 2022, reaching a peak of €1,087 per month in the first quarter of 2023. This surge in prices can be attributed to the removal of rent controls by the Spanish courts, allowing landlords to charge market rates for new rental contracts. Additionally, there has been a significant reduction in the number of rental homes available, with a 40% decrease in listings on property portal Idealista over the past four years.
The demand for rental homes in Barcelona has been further intensified by the city’s reputation as a tech hub, attracting well-paid international workers. Approximately one out of every five residents in Barcelona is a foreigner. This high demand, coupled with the limited supply of apartments, has caused many people to seek housing in peripheral areas where prices are more affordable.
The situation is no better for locals hoping to buy property in Barcelona. While the city’s housing market initially recovered after the global financial crisis, the Catalan independence referendum in 2017 led to instability in the market. Prices were only beginning to increase again before the Covid pandemic, which resulted in a temporary decline due to a decrease in tourism and locals leaving the city. However, prices have now rebounded, with the average price per square meter reaching €4,131 in June, almost back to pre-pandemic levels.
Barcelona’s high property costs can be attributed to various factors. Foreign investors and buyers have contributed to the rising prices, along with the impact of Airbnb-style rentals. Additionally, a lack of supply has been exacerbated by strict property regulations implemented by the former mayor, Ada Colau. These regulations required that 30% of new homes in developments over 600 square meters be allocated for social housing. The result has been a significant decrease in home building since the quota was implemented.
The current mayor, Jaume Collboni, has promised to review the social housing quota and plans to introduce legislation to cap rental increases. The hope is that relaxing these rules will stimulate investment and encourage a resurgence in building. However, until then, cash-rich foreign buyers are taking advantage of the market. Foreign purchasers accounted for a record 22% of property sales in Barcelona in the final quarter of 2022, with over half of luxury properties being bought by foreigners.
While British buyers were previously the largest group of foreign purchasers in Spain, their numbers have decreased since Brexit. In contrast, there has been a significant increase in American home purchases in Spain. Many international buyers are drawn to neighborhoods like Eixample, which offers a mix of city life, culture, and proximity to the beach.
Barcelona’s future under its new mayor remains uncertain, but the city continues to attract residents and investors alike with its unique charm and appeal. Despite recent challenges, Barcelona remains a desirable destination for those seeking a vibrant and multicultural lifestyle.
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