Neither the bank deposits, nor the Stock Exchange, nor the bonds. At present, the best investment is the property investments. These assets offer annual average gross profitability next to two digits. There is no financial product of low risk that approaches this yield and it seems very difficult that it is while the interest rates, the price of the money; it is still maintained at 0 %. Exactly, according to the Spanish Bank (BE), the profitability in the residential real estate sector climbs up to 8,3 %. This percentage results from the sum of the exploitation of the property across the rent (4,4 %) and its revaluation (3,9 %).
This privileged situation of the property as big assets of investment happens because the sale prices increasing and the property rental market is growing. According to the real estate experts and economists, these two parameters give faith in addition to a residential market normalized and balanced with a double reflex. First, the investor does not buy an apartment to obtain profitability in the short term with its resale but his target set on renting it and receiving a periodic revenue records. Second: the rent has provoked that more than 20 % of the Spanish residential properties is subject already to this regime.
Both the professional investors and the individuals have seen in the residential real estate patrimony the best basket to put its funds and savings.
The banks grant mortgages again, therefore the investment in property has not limited itself to national or international funds, but also the small and medium-sized investor can realize it. Undoubtedly, a residential property is one of the best investments of the moment. It has less risk than the stock markets and profitability is higher than the traditional saving products.
In this sense, the most interesting places for the investor are Madrid and Barcelona to the head. Moreover, do not forget the heterogeneity of the market, there are some districts, which offer more profitability than others do. Therefore, in the central districts (the most quoted), the profitability describes the opposite behavior in investment: rent is less attractive than revaluation.
RESIDENTIAL PROPERTY: IS IT BETTER TO RENT OR BUY?
Generally, the experts see renting like a good option in the short and medium term. Speaking about long-term, they are decanting for a purchase. However, rules always have exceptions according to the circumstances of every case.
Property since fell down almost 35 % of its value in the years of recession with regard to the real estate bubble, when many people paid exorbitant prices. In that magnificent 2007, there were 775.000 properties sold in a year. In 2013, this number was coming down to 312.000. Many people were ruined, but although they say that renting is to throw the money. Then what to do? To buy or to rent?
There are no answers neither absolute truths to these questions, but yes, some indications, which guide towards the most profitable decision. Generally, for the experts it is a question of a time. They assure that renting is a good option in the short and medium term, since it does not need big investment to live in an apartment. Speaking about long-term, the majority are decanting for a purchase, since long stays allow amortization of the high initial expense, which confront those who acquire a property. Nevertheless, the “short” and “long” term are very uncertain concepts, it is interesting to convert these concepts to concrete temporary horizons. This way, we could say that if somebody is going to overcome five years living of rent, the most profitable option would be to purchase. Nevertheless, this is an only on average, since there are analysts who speak of three years.
Arguments in favor of a purchase
Interest rates are in historical minimums, what has extended the offer of competitive mortgages. All this in a moment when the real estate market begins to recover: the forecasts discard new falls and point even at a progressive increase of the prices in an annual status of up to 5 % impelled by the low costs of financing and the business cycle.
In addition, it plays in favour of the purchase that if a buyer´s circumstances are going to change, it is possible to rent this property in order to get the profitability. It does not seem that candidates are missing, since the number of people who live in lease has multiplied by three since the crisis exploded, overcoming today 20 %. This can suggest a good option before the uncertain moment of the Stock Exchange and the low profitability of the deposits.
Arguments against a purchase
Properties as it was mentioned in the previous point tend to be revalued. However, the history shows now that the prices also can fall down. Although anything leads today at another bubble, nobody can discard it, leaving the buyer tied up to the property and with the constant fear of that, interest could raise during the time in which he is paying the mortgage. This loan and the high expenses of a purchase operation appear, to be among the biggest disadvantages.
Arguments in favor of a rent
One usually says that it is the best option as a temporary solution or like a measurement tied to the mobility of the tenant. Without the ties of the mortgage and without having to pay the initial expenses, renting allows flexibility to change apartment if the circumstances change.
Arguments against of rent
The defenders of the purchase usually argue that the worst thing of living in a rented apartment is that one pays a fixed amount every month but, with the years, no property will be kept in return. It is what some of them call “to throw the money”. When the decision of living in a rented apartment is made, it is necessary to take into account that the monthly salary is not invariable; a very important point that sometimes is forgotten at the time of doing the calculations. This way, for example, in the last 30 years, the IPC has raised 155 %, what theoretically would have raised a rent from 1.000 euros of 1986 up to the 2.548 of 2016. This is an only one general statistics at the level of Spain, but it serves to have an idea of that rent is not kept invariab