The average effort to acquire a property, the ratio that relates the average price of the residential market to household incomes, exceeds 40%, reaching levels not seen since 2014, according to a study published by the appraiser UVE Valoraciones, based on data from the Ministry of Housing and Urban Agenda (MIVAU), Cadastre, and the National Institute of Statistics (INE). The reasons behind this tightening in housing accessibility, according to UVE, are two-fold: the “rise in interest rates” and, in the case of tourist-oriented locations, the “purchase of properties by non-permanent residents“.
[–>Generally, different financial institutions require property buyers to ensure that monthly mortgage payments do not exceed between 30% and 35% of their incomes, with some banks allowing up to 40%. These percentages are significantly exceeded in eleven out of Spain’s twelve most populous cities (except Murcia): Palma de Mallorca (58%), Madrid (57%), Malaga (51%), Barcelona (50%), Las Palmas de Gran Canaria (41%), Alicante (40%), Bilbao (39%), Seville (38%), Valencia (35%), Cordoba (32%), and Zaragoza (31%).
Since 2008, coinciding with the burst of the real estate bubble, when it stood at 60%, the national average effort has seen a downward trend, hitting its lowest at 30% in 2021. However, from that year onwards, it has been on the rise again, correlating with the increase in housing prices post-pandemic, and shows no signs of slowing down, at least for now.
Cities where buying a property is almost impossible
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There are twenty cities in Spain where purchasing a property is practically impossible because mortgage payments would represent over 60% of the average income, something no bank would approve. According to Germán Pérez Barrio, president of UVE Valoraciones, this leads to “a great deal of property purchases in certain municipalities being made by individuals who do not permanently reside there and have a much higher purchasing power than the average inhabitants”.
Many of these locations are highly touristic, where, based on the data, families would have to dedicate more than their entire income to paying off the mortgage derived from property acquisition. This is the case in Santa Eulalia del Río (Ibiza), Adeje (Tenerife), Marbella or Jávea (Alicante). Efforts also exceed 60% in Calvià (Mallorca), San Bartolomé de Tirajana (Gran Canaria), Fuengirola (Malaga), Arona (Tenerife), Eivissa (Ibiza), Mijas (Malaga), Ciutadella de Menorca, Estepona, Llucmajor (Mallorca), Benidorm, Benalmádena (Malaga), Puerto de la Cruz (Tenerife), and San Roque (Cadiz). In particular, all these locations together have a population of over 1.06 million inhabitants.
There are also several districts in Madrid and Barcelona where average efforts exceed 60%, with a combined population of over 790,000 individuals. In Barcelona, this includes Ciutat Vella and Eixample, while in Madrid, districts like Retiro, Salamanca, and Arganzuela surpass this percentage.
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Affordable locations to buy a house
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On the other end of the spectrum, there are locations where the average effort does not exceed 25% or even falls below 20%, making it easy for middle-income households to buy property. These are mainly found in regions with a less dynamic real estate market. The list includes some provincial capitals such as Ciudad Real, Ávila, Soria, or Palencia, and towns like Miranda de Ebro, Linares, Alcoy, Burriana, Ferrol, Ontinyent, or Ponferrada. Puertollano (Ciudad Real), Mieres (Asturias), Algemesí (Valencia Community), and Novelda (Alicante) are the four municipalities where families have to pay the least for their mortgages in relation to their incomes, according to UVE Valoraciones.
