There have been numerous years of warnings, complaints, headlines, reports, electoral promises, and even legislation addressing the relentless and often unaffordable rental and property sale prices in Spain and the Canary Islands. However, it appears that the situation is not easing, and the upward trend is expected to persist. This perspective is shared by several Tenerife estate agents, operating in the south, north, and metropolitan areas, who spoke to DIARIO DE AVISOS.
According to these agents, the overwhelming shortage of available properties (“I have never seen anything like it”), the increasing “unfair” competition from holiday rentals in tourist areas, and now even in other locations, along with a housing law that does not inspire confidence, represent a volatile mix with an indefinite trajectory. This situation continues to cause frustration among the middle and lower-income classes in their quest for housing that meets their basic needs.
The most recent poverty report highlights these soaring prices as one of the primary factors affecting not only the quality of life and resource availability but also defining the socioeconomic status of families and individuals. In the most stressed areas of the Canary Islands, such as popular tourist destinations or capital cities like Santa Cruz de Tenerife and Las Palmas, average rental prices are already hovering around 900 euros, with indications that they may soon surpass 1,000 euros.
This figure is unaffordable for a significant portion of the population due to modest incomes, despite the fact that employment levels have been robust for some time (with record numbers of workers registered with the Social Security). Spain’s unemployment rate stands at 11%, well above the average in other developed countries but far from the levels seen during the COVID crisis or the financial crisis of 2008-13.
Vanessa Rubio, representing the real estate company Olympo, possesses a deep understanding of the housing market in the metropolitan area of Tenerife and the rest of the island. She emphasizes a pronounced disparity between supply and demand, particularly in the rental market. With the Euribor rate nearing 4% this year, selling property has become more challenging, except for cash buyers. The number of mortgages continues to decline, and this downturn is not akin to the 2008 crisis, which had more specific causes. The current situation is characterized by a more generalized challenge, not rooted in over-indebtedness among families.
In Rubio’s view, the recent housing legislation enacted by the central government does not contribute to stabilizing or lowering rental prices. Landlords, who make up 80% of property owners and are mostly small-scale investors, feel inadequately protected. Legal uncertainties and more lucrative alternatives, rather than accepting a 2% rent increase this year or a 3% increase next year, are driving many to opt for holiday rentals. This trend is further inflating prices, and there is little indication that the situation will change in the foreseeable future.
Rubio expresses pessimism about the outlook for 2024, citing the lack of a housing policy from the Canary Islands government and the uncontrolled proliferation of holiday rentals. She argues that offering housing to tourists in locations like Taco, Las Chumberas, or Ofra, aside from cases of squatters, is nonsensical.
Falbrant Gestores Inmobiliarios, operating in La Orotava and throughout the Valley, also underscores the scarcity of available properties. Over the past two years, they have often refrained from advertising new rental listings due to their extensive waiting list. They prioritize clients they believe are most likely to secure a tenancy, whether with or without rental insurance.
“For the last two years, it has been impossible to find anything at 300 or 400 euros, except for shared flats or rooms. Almost no new listings are available, and clients often wait for months. What is priced at 400, 500, or 600 euros today, if a tenant vacates, the next day the rent jumps to 600, 700, 800, or more.” In contrast to the past when they had over twenty rental properties, they now have only three or four on their website. When they do add a new listing, they typically receive over 30 inquiries on the first day. Additionally, it is uncommon for a property to remain unrented for an extended period.
The rising property sale prices are attributed to the same scarcity of supply, and the fact that many foreigners are purchasing properties in cash. These buyers are often older individuals who sell their homes and choose to spend their later years on the island. Consequently, studios that were once priced at 60,000 euros a few years ago are now scarcely found for less than 100,000 euros.
Francisco Algarra, of Promotions Centre, a real estate agent with over 40 years of experience in Tenerife, emphasizes the current shortage of available properties as the primary root cause of the issue. He attributes this shortage in large part to the absence of public and private development initiatives over time.
Algarra also laments the absence of renovation projects for attractive buildings in tourist areas like the Port, instead focusing on public housing projects that, in his opinion, do not align with the area’s character. He argues that public housing should be prioritized in municipalities like Los Realejos, La Orotava, Santa Úrsula, and areas like El Tope in El Puerto, highlighting the need for changes in partial plans and addressing the shortage of land. Additionally, he points out a generational shift among developers, many of whom are now aging and less inclined to undertake large projects, resulting in a scarcity of new developments.
Algarra concludes that it is unrealistic to expect developers in areas like the Port, where properties sell for 3,000 euros per square meter, to construct social housing priced at a thousand euros or slightly more. This situation, he argues, mirrors conditions in other parts of Europe and elsewhere, where working individuals find it increasingly challenging to reside in certain locations due to the interplay of prices, supply, and demand.
Canary Islands: “Renting was non-existent”
Algarra has witnessed the transformation of the rental and sales landscape on the island. “Around a decade ago, rentals were virtually unheard of. We rarely discussed them, as we didn’t want potential buyers to hear about the challenges faced by renters. Back then, about 80% of our clients were German retirees aged 60 and over, often purchasing without a mortgage, primarily in the port area, and later in the south since the 1990s. Today, rentals make up nearly 70% of our business, but the problem lies in the lack of available properties.
Banks became reluctant to lend, and Canarian residents slowly withdrew their money in frustration to buy studios or small apartments. Now, after a decade, they’ve all but disappeared, leaving only rentals, with an average price of 700 euros for a single room and going up from there. Of course, we don’t even pay attention to those internet listings offering rooms for 1,000 or 1,200 euros, as it’s simply unaffordable. In fact, many Germans, who used to be our best market, now need to take on part-time work to supplement their pensions with over 2,000 euros, and they are shocked by rental prices at 700 or 800 euros.”
In this context, he also laments the negative impact of holiday rentals, which he believes should be phased out due to unfair competition, their influence on pricing, and even their effects on poverty. He also highlights the challenges faced by real estate agencies in sourcing new properties to offer.
“In fact, I tell those who are looking to rent and are very particular about prices and conditions that, in no time, they won’t even find what’s available at the moment.” In his view, the situation seems likely to persist, although he doesn’t rule out some changes influenced by global and national uncertainties, including geopolitical conflicts.
THE GOVERNMENT SUPPORTS THE RIGHT ON LAND AS A SOLUTION FOR HOUSING
As recently explained by the Canary Islands Government’s Minister of Public Works, Housing, and Mobility, Pablo Rodríguez, in the regional parliament, the government is committed to promoting the right to superficies to boost the housing supply and facilitate affordable rentals through public-private partnerships on the islands. To achieve this, the public entity Visocan has identified urban land suitable for housing construction through this mechanism by private developers for a 75-year period. These properties would be rented at affordable rates, following the model in Catalonia, Madrid, and Valencia.
The government has developed an action plan to complement regional and national housing initiatives, as well as European support, to expedite solutions to this pressing issue. This includes efforts involving the Canary Islands Housing Institute (ICAVI) and Visocan.
Among various measures, the plan aims to fill 72 vacancies within ICAVI to enhance citizen services and handle applications and files from different campaigns more efficiently. Negotiations are ongoing with local and regional authorities to transfer land for the creation of a pool of available properties for future projects. A comprehensive regional survey will be conducted, island by island, to identify land suitable for subsidized public housing construction.
Additionally, modifications are planned for the Canary Islands Basic Module (MBC), which has remained unchanged since 2003. According to the government, this revision is essential to encourage public-private collaboration and project bidding by accounting for rising construction costs. Furthermore, changes to the public housing awarding decree are in the works to ensure a fairer process.