Demand for second homes continues to decline

• Demand is higher as rent (60%) than purchase (40%)

• Four out of ten second home buyers consider putting it up for rent

The demand for second residence housing maintains the downward trend that it has been registering since 2017. If then 12% of individuals who were looking for a home were doing so for vacation purposes, that percentage has dropped to 9% in 2020. This is clear from the Fotocasa Research analysis "Profile of the second home buyer" prepared by the real estate portal Fotocasa.

These second home applicants are looking more in the rental market (60%) than in the property market (40%). The weight of this group in relation to the group of each of these two markets is very even: holiday home seekers account for 10% of the applicants for rent and 9% of the applicants for sale.

Who demands second residence housing?

The study shows that there is no profile of a second home claimant, because precisely the differences between those who search the rental market and those who search for property are so significant as to be analyzed separately.

Thus, those who buy (or try to buy) a second home tend to have an older profile and a higher socioeconomic level (half of them are located in the two highest steps, IA1 and IA2), while among those who rent (or try to rent) there is a lower percentage of people who live as a couple and the intermediate levels have more prominence in socioeconomic terms.

Specifically, in relation to the average age of both targets there is more than ten years of difference: between buyers it is 45 years while the tenants are, on average, 34 years. This data, however, should be taken with some caution: there are signs (such as the high percentage of applicants for a second rental residence who say they live with their parents) that suggest that in the lease there are many young people surveyed who distort the results with answers not directly linked to the fact of renting a holiday home.

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Characteristics of the property

When evaluating the characteristics that are sought in a second residence, there are also relevant differences between buyers and tenants. Despite this, there is a common point: the price.

In order to have a second home, it is essential to be able to pay for it. Therefore, buyers value the price with an average importance of 8.4 points and tenants of 8.3.

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Once the price cut is overcome, the intrinsic characteristics of the property are what buyers take into account the most. That is to say: that it has the number of rooms sought, the desired square meters and the distribution according to the tastes of the buyer.

For their part, tenants, logically, value more features of use, such as not having to invest money in renovations, having services nearby and the location having good public transport connections.

Regarding the location of the home, as is logical, when it comes to second homes, it implies that there is a displacement. Half of the property applicants and a third of those seeking to rent do so in a province other than that of their habitual residence.

Four out of ten buyers consider putting the house up for rent

Second-home buyers are of the opinion that the home is a good investment and pays more than renting. In fact, for four out of ten renting a home is an alternative. Specifically, 25% consider carrying out this action for vacation rentals or short stays. There is also a 12% who bet on the long-term.

When they decide to take the step of renting the home, 50% do so because they consider it profitable and 33% to alleviate the financial burden of the mortgage on this property. Also 16% invest in a second residence with the aim of selling it in the future if the market is favorable.

Apart from those who decide to rent, there are 63% second home applicants who prefer not to do so because, although it is true that 83% expect to use it, there are reasons such as the fear that tenants will spoil the housing or have problems of non-payment of rent that make them reject the idea of rent.

Reasons for the purchase or rental

When it comes to buying a second home, the reasons that lead to this decision are generally closely tied to the value of the property as an investment. In the majority, buyers see this action as a long-term investment, a way to build equity and insurance for the future.

In addition, when it comes to more personal reasons, 43% of buyers say that a second home offers a return that no other financial product offers.

Logically, the reasons that drive the search for a second home rental are different from those of the buyers. The perception of mobility and flexibility offered by a rental is the idea that is most manifested among tenants.

However, the economic situation is also decisive. In fact, 25% say that their economy prevents them from buying a home and 17% consider that renting means less maintenance costs.

These differences between one group and the other fit perfectly with the sociodemographic characteristics that we have analyzed: the people who choose to rent are younger and from lower socioeconomic strata than those of the buyers, and, therefore, it is normal for this to be reflected on the reasons that drive them to opt for the rental market.

The search process takes longer

During the process of looking for a second residence in property there are some important changes with respect to the initial claims. Up to 63% of those who came to acquire a property considered the possibility of a new construction home, although only 23% of them ended up buying it and 77% ended up in the second-hand market.

This search phase is significantly longer in 2020 than in 2019: 43% of the applicants for home ownership as a second residence have invested less than six months, a percentage that a year ago was 55%.

This figure also represents a notable difference compared to the group of home buyers who, according to data from the report prepared by Fotocasa Research, in 65% of cases need less than six months.

Logically, when it comes to renting a second home, the terms are much shorter. In this case, 65% need less than a month to find a second home for rent.

What both markets do have in common is that price is the main difficulty encountered by those who have managed to rent or buy a second home: the percentage (64%) of those who mention it as a difficulty is identical in both markets. They also agree that the condition of the houses and the location are the main problems, after the price.

The price is the impediment of half of those who do not close the operation

The difficulty posed by the price for those who, despite this, have come to complete their search for a second home becomes an insurmountable impediment for half of those who do not. This is indicated by 48% of those who have not managed to rent and 49% of those who have not managed to buy.

The latter, those who have not found a home to own, have an even more important reason: 53% have not found a home that suits their needs.

Market opinion

Applicants for a second home, whether owned or rented, agree that the feeling of ownership remains deeply rooted in Spaniards. It is the opinion on the market that reaches the most support: 7.1 points among tenants and 8 points among buyers. Both groups also agree that rents have risen so much that it is more rewarding to pay a mortgage and that buying a home is a good investment.

Despite this, second-home (or aspiring) tenants generally have softer views. They only give more solid support than buyers (and those who intend to buy) when it comes to issues that concern them directly: they believe more that the market trend is to rent more and buy less and that a regulation of rental prices it can help balance supply and demand.