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Record Spike in Rental Prices Sweeps Across Spain: What's Driving the Surge

In a surprising turn of events, Spain has witnessed a staggering 9.3% year-on-year increase in rental prices, according to reports from the Idealista portal. The irony lies in the modern housing law imposing a ceiling on rental price growth, limiting it to 2% in 2023, with a subsequent increase to 3% scheduled for 2024 following amendments made in May.

So, what's fueling this remarkable surge in rental prices, especially when legislation appears to be constraining them?

The answer lies in the overwhelming demand for rental properties, far outstripping supply. As a result, property owners are advocating for higher fixed prices to be enshrined in legislation.

Notably, the most substantial annual increases in rental costs have been recorded in the following cities:

1. Valencia – 22.1%
2. Alicante - 18.6%
3. Barcelona – 18.1%
4. Malaga - 17.9%
5. Madrid – 10.7%

Barcelona currently tops the list as the most expensive city for renting, with an average cost of €20 per square meter. Madrid follows closely behind at €17.7 per square meter.

As discussions within the government continue regarding potential market regulations, the pressing question remains: Is investing in real estate for rental purposes still a lucrative endeavor in light of these soaring prices?


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