Small Rent Market: Understanding the Micro-Market Dynamics in Spanish Housing

1. Housing rent market: the relevance of a micromarket Paloma Taltavull de La Paz University of Alicante, Spain ERES Yearly Conference Eindhowen, June, 2011 June, 2011

2. Paper topic • Rent market in Spain is very small: 11,2% of total family homes (census 2001) • Perception of a tiny market: • Retrictions to mobility • Inefficiencies in housing market • Is that true? • Has the market balance in some way to develop micro markets on rent? June, 2011

3. Agenda • Introduction • Aim of the paper • General overview of Spanish rent market • Data • Models: factorial analysis • Discussion and conclusions June, 2011

4. Research questions • Small rent market .. To who?. House mkt segmented? • Type of house rented • The role of a small rent market to: • Cover mobility needs of population/work market • Cover housing needs June, 2011

5. Findings • Small in average but larger in urban areas • Covering mobility needs • 2 main types of houses rented • 5 types of household renting homes • Factors affecting mobility and quality.. Supply June, 2011

6. Data description • Census 2001, microdata • 92088 observations for all Spain, • Statistically significant of all market • Information including: • House characteristics… 33, 31 usable • Construction history • Demand features of households renting houses June, 2011

7. Methodology • 2 steps: • Cluster analysis to define the typical house rented • Factor analysis to find the ‘typical’ household renting homes in Spain June, 2011

8. RENT MARKET IN SPAIN June, 2011

9. Introduction June, 2011

10. General overview June, 2011

11. General overview June, 2011

12. General overview. Spatial distribution Main provinces Smaler rent market’s provinces June, 2011

13. General overview June, 2011

14. General overview: Segmentation June, 2011

15. Covering mobility June, 2011

16. YEAR OF ARRIVAL TO RENT HOUSE, SPANISH MARKET 2001 ( % of total family houses in rentr) 18,0 Source. INE, Censo RENT 15,5 16,0 14,0 12,50 12,0 10,74 10,48 10,39 10,19 10,0 8,0 7,34 7,27 6,0 5,12 4,73 4,20 4,0 1,51 2,0 0,0 Antes de 1941-1960 1961-1970 1971-1980 1981-1990 1991-1995 1996 1997 1998 1999 2000 2001 1941 Stable living house? June, 2011

17. Somerenthousignsupplycharacteristics June, 2011

18. Distributed along groups with lower size June, 2011

19. RENT STOS BY AGE OF THE BUILDING. SPANISH HOUSING STOCK 2001 ( % total rent houses) 90,00 Before 1971 Source. INE, Censo 2001 1971-1990 80,00 After 1991 70,00 60,00 50,00 40,00 30,00 20,00 10,00 12-Castellón/Castelló 46-Valencia/València 03-Alicante/Alacant 38-Santa Cruz de 07-Balears (Illes) 35-Palmas (Las) 13-Ciudad Real 19-Guadalajara 36-Pontevedra 37-Salamanca 15-Coruña (A) 20-Guipúzcoa 43-Tarragona 26-Rioja (La) 08-Barcelona 47-Valladolid 50-Zaragoza 39-Cantabria 34-Palencia 02-Albacete 14-Córdoba 18-Granada 32-Ourense 10-Cáceres 40-Segovia 31-Navarra 33-Asturias 48-Vizcaya 06-Badajoz 49-Zamora 04-Almería 29-Málaga 22-Huesca 16-Cuenca 0,00 09-Burgos 21-Huelva 28-Madrid 30-Murcia 52-Melilla 41-Sevilla 45-Toledo 17-Girona 44-Teruel 25-Lleida 11-Cádiz 51-Ceuta 01-Álava 42-Soria 27-Lugo 05-Ávila 24-León 23-Jaén TOTAL June, 2011

20. General overview: Quality June, 2011

21. SOME DEMAND CHARACTERISTICS OF RENT MARKET June, 2011

22. Model 2- data description June, 2011

23. Model 2- data description June, 2011

24. Model 2- data description June, 2011

25. Model 2- data description June, 2011

26. Model 2- data description. Rent by nationality June, 2011

27. Model 2- data description June, 2011

28. Model 2- data description. Mobility and rent market June, 2011

29. Model 2- data description June, 2011

30. Model • Rent market suplly/demand • … 44 variables ..profile of household in rent • 22 about the head of household • 22 about structure of the household • With 22 house characteristics • 92,088 observations microdata • Cluster analysis … types? • Supply groups of houses by characteristics • Households…Demand groups • Factorial analysis… Determinants of rent June, 2011

31. Supply. Rent house type • Average house… characteristics • Rented since 1992 • Good neighbourhood quality • Good communications, enough public services • Low delinquency • Low green areas • Around 81 m2, 4 bedrooms, new • Good quality June, 2011

32. Model 1. Supply. • 2 cluster identified: 2 types of houses: June, 2011

33. Model 1. Supply. Centroids June, 2011

34. Model 2 Factors explaining supply side of rent market June, 2011

35. Demand • Household renting house ‘average-type’ • Spanish, male, around 35 years old • Living in hte municipality from more than one decade • Married, 3 – 4 people: couple plus children • Working in the same municipality. 2 workers • 20 minutes commuting • Permanent contract, working for other • Bachelor level • Good quality in the house June, 2011

36. Model 1. Demand…5 Clusters identified • Three foreign households • 1.- Single immigrant men (Latinoamerica) living with others, young, medium education level • High mobility, commuting 1.5 hours • Recent arrived, working more hours than average • Good quality in house neighbourhood, 80 m2 • 3.- Single female also immigrant (Latinoamerica), medium age, low education level • Living with other person (child or partner) • No recent arrived (moving from other city), working little hours • No so good quality in neighbourhood • 2. Married man, from Europe (main UK) • High education level, working in services • Working in the city, stable work • High quality in living conditions, large houses June, 2011

37. Model 1. 5 Clusters identified • 2 Spanish rent households. • 4. Single man, 37 years old, medium education • Not migrant (living in the municipality from long time) • Working in companies link to services, medium level salary • Good quality in the neighbourhood, 70 m2 • 5. Single man, 45 years old, high level of education • Moved to municipality long time ago • Commuting in own car • Good or very good quality in neighbourhood June, 2011

38. Model 2: Household factors determinants of rent a house. Demand side June, 2011

39. Model 2: factor analysis June, 2011

40. Conclusions • Rent market in Spain • Census 2001 data: stock&population, no other sources • Microdata • Two level of analysis: • Typology of houses supplied in rent • Typology of rent house demanders • Cluster and factorial analysis • Including information about mobility for labour reasons June, 2011

41. Conclusions • Micro rent market in Spain but with relevance in capitals • Most associated to mobility needs for labour purposes • Direct and possitive relationship statistically significant • Rent houses not statistically distinct from owned homes … • Good quality.. Similar conditions • Smaller than the owned stock June, 2011

42. Conclusions • Relevant to cover immigrants’ demand • From all income ranges • Not homogeneous for Spanish households • There is no a ‘Rent typology’ for Spanish households • Main role for single households, both foreign as well as Spanish • Not relevant for traditional households… ownership rate June, 2011

43. Conclusions • Very relevant in some provinces/cities, with rent rates similar to the international ones • Ceuta, Melilla, Canary Islands, Baleares, Barcelona, Cádiz, León, Coruña… • Limitations in housing mkt in other: • Madrid, • Housing needs has been covered by ownership June, 2011

44. Future • Rent market in Spain changes during 2000’s June, 2011