Housing rent market the relevance of a micromarket

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

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 2

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

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 4

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 5

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 6

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

RENT MARKET IN SPAIN June, 2011 8

Introduction June, 2011 9

General overview June, 2011 10

General overview June, 2011 11

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

General overview June, 2011 13

General overview: Segmentation June, 2011 14

RENT AND MOBILITY RANKING (Ratio between new residents and rented houses) Source: INE 2000 Provinces 19 -Guadalajara 03 -Alicante/Alacant 45 -Toledo 04 -Almería 26 -Rioja (La) 16 -Cuenca 46 -Valencia/València 44 -Teruel 12 -Castellón/Castelló 31 -Navarra 30 -Murcia 01 -Álava 39 -Cantabria 43 -Tarragona 42 -Soria 48 -Vizcaya 28 -Madrid 22 -Huesca 13 -Ciudad Real 02 -Albacete 32 -Ourense 49 -Zamora 17 -Girona 29 -Málaga 47 -Valladolid 18 -Granada 2, 08 1, 57 1, 44 1, 49 1, 37 1, 22 1, 10 1, 19 1, 24 1, 25 1, 06 1, 15 1, 24 1, 08 1, 07 1, 09 0, 84 0, 92 0, 93 1, 07 1, 00 0, 87 0, 93 0, 74 0, 90 2001 2, 40 1, 83 1, 56 1, 50 1, 40 1, 35 1, 34 1, 29 1, 26 1, 21 1, 16 1, 13 1, 10 1, 09 1, 04 1, 01 1, 00 0, 97 0, 95 0, 92 0, 91 2000 Provincias 05 -Ávila 25 -Lleida 35 -Palmas (Las) 40 -Segovia 41 -Sevilla 09 -Burgos 20 -Guipúzcoa 27 -Lugo 21 -Huelva 38 -Santa Cruz de Tenerife 07 -Balears (Illes) 37 -Salamanca 34 -Palencia 36 -Pontevedra 24 -León 23 -Jaén 15 -Coruña (A) 14 -Córdoba 10 -Cáceres 08 -Barcelona 06 -Badajoz 51 -Ceuta 33 -Asturias 11 -Cádiz 50 -Zaragoza 52 -Melilla June, 2011 2001 0, 87 0, 66 1, 00 0, 81 0, 93 0, 72 0, 77 0, 88 0, 81 0, 75 0, 90 0, 80 0, 69 0, 65 0, 78 0, 63 0, 64 0, 59 0, 53 0, 49 0, 43 0, 35 0, 91 0, 90 0, 89 0, 87 0, 86 0, 84 0, 82 0, 79 0, 77 0, 74 0, 70 0, 69 0, 66 0, 65 0, 64 0, 63 0, 59 0, 56 0, 49 0, 48 0, 46 0, 44 0, 32 Covering mobility 15

Stable living house? 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, 19 10, 39 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 1941 June, 2011 17 2001

SOME RENT HOUSIGN SUPPLY CHARACTERISTICS June, 2011 19

Distributed along groups with lower size June, 2011 20

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

General overview: Quality June, 2011 22

SOME DEMAND CHARACTERISTICS OF RENT MARKET 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 June, 2011 27

RENT TENENCY AND NATIONALITY (% of total population living in rent) Spanish European without Spanish Áfricans Latinamericans Asians Others 79, 60 4, 81 4, 87 9, 80 0, 92 0, 02 Source. INE, Censo 2001 June, 2011 Model 2 - data description. Rent by nationality 29

RENT TENENCY AND NATIONALITY (% of total population living in rent) Spanish European without Spanish Áfricans Latinamericans Asians Others 79, 60 4, 81 4, 87 9, 80 0, 92 0, 02 Source. INE, Censo 2001 June, 2011 Model 2 - data description 30

Model 2 - data description. Mobility and rent market June, 2011 31

Model 2 - data description June, 2011 32

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 33

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 m 2, 4 bedrooms, new – Good quality June, 2011 34

Model 1. Supply. • 2 cluster identified: 2 types of houses: June, 2011 35

Model 1. Supply. Centroids June, 2011 36

Model 2 Factors explaining supply side of rent market Factors explaining housing rent. The supply side Factor 1 - Type of building KMO and Bartlett's Test Númber of floors 0, 88 Floor of the apartment 0, 79 Water system 0, 82 Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Type of building 0, 75 Water distribution network 0, 78 Bartlett's Test of Sphericity Type of owner 0, 59 Factor 8 – Building quality Number of garaje parking 0, 51 Building quality 0, 71 Sig. Factor 2 - Problems in the neighbourhood Bad road network 0, 52 Contamination 0, 66 Matrix Determinant 0 , 012 Not well cleaned streets 0, 64 Factor 9 - Accesibility Noises 0, 63 Delinquency, insecurity 0, 58 Total Varianza explicada No green space 0, 47 Componentes- Factores Bad accesibility 0, 3 Factor 3 - Size Factor 7 – Water system 0, 75 Approx. Chi-Square 14724, 87 df 378 0 Vehicles availabilty (cars. . ) 0, 7 Initial Eigenvalues Total % de la varianze % Acc 1 3, 85 13, 75 Nº of rooms 0, 87 2 1, 99 7, 11 20, 86 Surface 0, 86 3 1, 68 5, 99 26, 85 4 1, 59 5, 69 32, 55 Factor 4 - Year of arrival to city 0, 83 5 1, 31 4, 67 37, 22 Year of arrival to house 0, 77 6 1, 22 4, 37 41, 59 7 1, 13 4, 04 45, 63 Factor 5 - Energy Type of energy used 0, 77 8 1, 09 3, 89 49, 52 Gas 0, 59 9 1, 08 3, 85 53, 36 Factor 6 - Facilities Telephone 0, 64 Hitting 0, 61 *Coeficientes de la matriz de componentes rotados June, 2011 Método de extracción: componentes principales, rotación: Varimax con normalización de Kaiser 37

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 38

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 m 2 – 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 June, 2011 • High quality in living conditions, large houses 39

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 m 2 – 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 40

Model 2: Household factors determinants of rent a house. Demand side June, 2011 41

Model 2: factor analysis June, 2011 42

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 43

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 44

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 45

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 46

Future • Rent market in Spain changes during 2000’s June, 2011 47