In a context in which talking about the rental market in Madrid—due to the idiosyncrasies of this medium, although the situation can be extrapolated to many cities in the country—is synonymous in the vast majority of cases with talking about price increases that seem to have no ceiling, it is a relief—albeit relative—that some districts of the city are recording falls in rental values.
Specifically, ten of Madrid’s 21 districts have seen a negative annual variation in rental housing prices between December 2024 and December 2025, according to the report Rental Housing in Spain in 2025, based on the Fotocasa Real Estate Index.
The decline was most noticeable in the district of Barajas, which recorded a 13.7% drop in rental prices and one of the highest ratings in terms of quality of life. Villaverde (-8.4%) follows with a difference of just over five points, and in third place is Fuencarral-El Pardo (-5.4%), where one of its neighborhoods has recorded the largest decline of the year in the capital.
The rest of the districts that complete the list of the ten that have experienced the sharpest fall in rental prices in Madrid are Puente de Vallecas (-5.2%), Latina (-5.0%), Moncloa – Aravaca (-1.8%), Carabanchel (-1.8%), Usera (-1.3%), Chamartín (-0.7%), and Tetuán (-0.1%).
What is the reason for this drop in rents in some districts of Madrid?
Editorial credit: Sauce Reques / Shutterstock.com
As is often the case when explaining almost any phenomenon, the answer is multifactorial. One of the reasons for this decline has to do with future tenants playing a more active role when negotiating with landlords. “We have detected a lower willingness to accept higher figures,” which leads to “downward adjustments in the final price,” explained Juan Uribe, from Alquiler de Engel & Völkers Madrid, in statements to Infobae.
According to María Matos, director of research and spokesperson for Fotocasa, the decline is also the result of three years of increases, which “reflects an adjustment in certain municipalities and districts in the region.” In terms of legislation, the Housing Rental Reference Index (IRAV) approved by the government has an influence, establishing that the maximum increase that can be applied in 2025 is 2.2%.
However, this rule only applies to contracts signed after May 25, 2023: in fact, many people will experience a significant increase throughout this year if their contracts were signed during the COVID period.