When it comes to finding a place to live, there is a question that almost always arises: Is it better to buy or rent a home?
In Spain, renting has always been seen as a temporary alternative, although the drop in prices due to the real estate bubble and the coronavirus pandemic makes more and more people rethink whether buying now is more profitable or if it is not worth a purchase. investment like that.
In this post we will talk about how the current situation is, about the aid to buy or rent a home and whether one option is more recommendable than the other.
Buying or renting a home?
What is the evolution of the current house price ? If you look at the last few years, rents have been on the rise in both interest and price. In fact, until the arrival of the coronavirus, rent had been rising for more than 5 years in the national average, especially in the main cities.
On average, rental prices have risen by around 2% (from € 7 / m2 in 2014 to € 11.5 / m2 in 2020), although in some places such as Madrid they have done so in a more bulky way, while others areas such as Castilla-La Mancha have suffered slight drops and rises.
The pandemic stopped this growth in its tracks, and if we look at rental prices in January 2020 compared to the same month in 2021, we find lower rents. Especially in big cities like Madrid, Barcelona or Seville.
In Spain, the culture of buying a home as a way to invest and increase savings has been common until the last real estate crisis. Until then, the prices of mortgages and rents were equal , so many thought that buying was a way to have something with which to face financial problems in the future.
When the bubble burst, the homeownership paradigm began to falter for many. In fact, in a very short time the number of supporters of rent multiplied , especially because the crisis was joined by other factors such as job and economic precariousness, a high difficulty in obtaining loans. In addition, the feeling that prices may continue to fall make the investment in purchase something not so profitable.
If we add to it a change in the labor market, with greater mobility than ever and the feeling that the jobs in which one started as a young man and retired there no longer exist, they seem to turn housing rental into another alternative. functional.
Seen this way, it seems that the option of renting a home is the one that prevails, although the doubt continues because some think that the current market is beginning to show signs of recovery, and that buying may again be a good opportunity.
If we are honest, the truth is that there is not a perfect formula for everyone , since you have to take into account factors such as your needs, income and situation. In addition to the advantages and disadvantages of buying or renting based on our reality.
For example, in the case of buying a home, falling prices can be an incentive for those looking to invest and wait leisurely for it to appreciate. Although the mortgage payment can be a significant burden , especially if the economic or employment situation is not very stable.
In the case of housing rental, you do not have to make a significant initial investment , in addition to that to change your house, all you have to do is notify the agreed time in advance to cancel the contract. Although it is also important to have financial solvency, and the owner can recover the home by giving prior notice to find another place to live.
What is the current outlook for buying and / or renting?
Currently, the real estate landscape is somewhat even in terms of prices. During 2020 the sale of housing has experienced a slight increase in price , as has the rent.
And for 2021? In large cities, rents will fall due mainly to the fact that in recent years they have risen a lot and demand has been directed to more affordable markets, such as those in nearby towns.
In addition, many of the apartments that were for sale have been put up for rent because they have been empty for a long time waiting for a new owner. And some homes that were previously used for vacation rentals have moved to residential and long-term rentals, which has increased the offer, lowering prices to be competitive.
As for sales prices, 2021 also looks like a year of declines due to the health crisis affecting the pockets. Job uncertainty both now and when the pandemic ends does not help, and the real estate sector estimates that the recovery will not be seen until at least 2022.
State aid to buy and / or rent a home
The State has launched some housing aid, both for those who want to buy and for those who seek flexibility in renting. Some of these aids are part of the package that aims to reduce the impact of COVID-19 on the economy , in addition to adapting to the needs of certain population groups.
Some of the housing aids are:
- Low income rental assistance program. The purpose is to facilitate access to a regular home for those who have difficulties paying a rent.The requirements vary depending on factors such as a large family, and the general limit is € 600 / month , although under certain conditions the rent may increase to € 900 (each CCAA will define these conditions). The amount of the aid is up to 40% of the monthly payment, up to 50% if the person requesting it is over 65 years of age.
- Help for young people for housing , whose objective is to allow those under 35 years of age to rent their habitual residence, or to receive help to buy a house in municipalities with a population of no more than 5,000 inhabitants. Income requirements also depend on several factors. As for the direct help for the purchase, the price of the house must be less than 100,000 euros. The aid for the rent to young people is up to 50% of the quota. For the purchase, the limit is 10,800 euros and 20% of the price of the house.
- Assistance program to minimize the impact of COVID-19 for those who prove that they are in economic or social vulnerability as a result of the pandemic. These aid can reach 100% of the rent, with a maximum of 900 euros per month and for 6 months.
So what is better, buy or rent?
The answer to this question is not really a yes or a no, but a it depends. Depending on your income and your life plans , it may be better to buy a house or rent.
If you want to have freedom of movement and do not plan to stay in a place to “put down roots” (at least for the moment), housing rental may be the option that interests you, just as if you have a low income that allows you to access the State aid.
If you have a good capacity to save, money to pay the entrance and you prefer to have more stability, the purchase of a house may be the most recommended option. Also if you think about investing and are not in a hurry to get your money back.
In any case, it is very important that you calculate well before making a decision, and that you inform yourself of all the aid you can access to buy or rent a home.