canary islands rental prices rise 2026

Canary Islands rents continue upward spiral as Bank of Spain sounds alarm

New lets entering market at much higher prices

Homes that are inherited or newly renovated are entering the residential rental market for the first time and, according to the Bank of Spain, are helping to fuel the upward price spiral seen in recent years. The regulator has detected that these properties come onto the market with rents that are 16.6% higher than existing ones. Such is the pressure from demand that landlords are confident they will find tenants regardless of the price.

The Canary Islands are no exception to this trend. The archipelago has now recorded 55 consecutive months of rental price increases and remains among the Spanish regions with the highest rents in the entire country.

Widening gap between new and existing tenancies

The Bank of Spain devotes a specific chapter to the housing crisis in which, among other issues, it compares the rental prices declared to the tax agency for properties that have just been let with those that were already rented previously. The conclusion is that the gap between the two has grown significantly. This so-called “entry premium” has always existed, but the Bank of Spain’s analysis reveals that in just four years it has risen by more than ten percentage points, from 6.2% to 16.6%.

A reduction in supply combined with rising demand allows owners to test the market in their quest for maximum profit. In doing so, they fuel further increases in rental costs and pave the way for more owners with the same ambitions to accelerate this cycle of harmful effects even further. The islands are among the most affected regions, as they also are when looking simply at rental prices without considering other factors. And that is because supply is becoming increasingly limited.

The Canary Islands feature among the markets experiencing prices above the national average, both for sales and rentals, according to indices published by Fotocasa.

Small landlords dominate the market

As for why the “entry premium” exists, the Bank of Spain attributes it partly to the very structure of the market. Some 76% of landlords in Spain own just a single rental property and another 15% own two. Together, these two groups control around 73% of the rented housing stock, meaning that the evolution of rents depends primarily on the decisions of thousands of small landlords rather than large-scale owners. Or, viewed from the opposite angle, it is the large-scale owners who benefit most from the collective decisions of thousands of small landlords.

The report also notes that for years many owners avoided renting out their properties due to the risk of non-payment, squatting or damage. However, the continuous rise in rents has progressively offset those fears. According to the body’s calculations, this higher profitability has helped increase Spain’s rental housing stock by around 95,000 properties per year. Furthermore, when combining rental income with property appreciation, the annual return reached 9.5% during the period between 2020 and 2024.

Canary Islands now fifth most expensive region

This context is also making itself felt in the Canary Islands. According to the Fotocasa Property Index, the average rental price reached €16.28 per square metre per month in May, 8% higher than a year earlier. At this price level, the archipelago occupies fifth place among Spain’s most expensive regions for renting, behind only Madrid, Catalonia, the Balearic Islands and the Basque Country. The trend confirms the persistence of pressure on the market. The Canary Islands has now recorded 55 consecutive months of year-on-year increases and, in May alone, rents rose a further 2.3% compared to the previous month.

The data published by Fotocasa does not show major differences in the trends across the two provinces. Santa Cruz de Tenerife recorded a year-on-year increase of 9%, reaching €16.17 per square metre, while Las Palmas reached €16.42 after rising 7.3%.

Price rises across all municipalities

The increase is widespread across the entire archipelago. It occurred in every municipality analysed by the property portal over the past year. Telde saw the sharpest rise, with an increase of 21.8%, followed by Candelaria (14.9%) and Puerto de la Cruz (14.5%). As for the most expensive locations, San Bartolomé de Tirajana leads the way at €21.69 per square metre per month. At the other end of the scale sits La Orotava.

Fotocasa and Idealista both place the Canary Islands among the regions with the highest rents and a trend of sustained growth. However, the rate of increase is more moderate than during periods of greater market tension. Even so, prices remain at record highs and consolidate a scenario of strong demand pressure.

Warning over rent controls

The Bank of Spain includes a final reflection in its report. The body considers that the high profitability obtained by owners is one of the factors that incentivises the addition of new properties to the rental market. In this context, it warns that policies limiting rents could reduce that economic incentive and slow the growth of available supply, an aspect it includes within its analysis of the current functioning of the residential market and the factors that influence prices.

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