Madrid and Barcelona are no longer so attractive: Your life cost reduces the benefit of residing in the big city

Private salaries in Madrid and Barcelona, explains the Bank of Spain in a report published yesterday, are "45% higher than those of the rest of the cities."

Madrid and Barcelona are no longer so attractive: Your life cost reduces the benefit of residing in the big city

Private salaries in Madrid and Barcelona, explains the Bank of Spain in a report published yesterday, are "45% higher than those of the rest of the cities." However, when those same salaries are adjusted for purchase power, the difference decreases by half. In fact, something more than half, because the data stays at 21%, thus reducing the economic benefit of residing and working in the big city.

And a good part of that difference is explained by the cost of housing, a fact that is reflected in such a striking fact that it contains the aforementioned document: "The cost of housing rental in the urban areas of Madrid and Barcelona was EN 2020 82% higher than in the average of the rest of the urban areas ». In this same sense, the BDE affects that "housing spending explained by 2020 more than two thirds of the price difference between Madrid-Barcelona and the rest of the urban areas of the country."

But there are more reasons. "Significant differences are also observed in the prices of some services, such as hospitality or sanitary nature," explains the supervisor. Why? Because these services include "a very important component of labor and, therefore, their costs are very influenced by the cost of life at which workers of these branches face." That is, that the prices of services and salaries «are feared».

In contrast, price differences in other goods and consumer services such as "feeding, clothing and footwear or communication are less relevant». The reason is that "products consumed in an urban area do not have to have been produced in that place, and, therefore, their prices in different areas tend to equalize."

With all this, the report is exemplified that "the average citizen of Madrid or Barcelona would need 1,200 euros to have the same purchasing power that the average citizen in the rest of the cities would enjoy 1,000 euros". The prices of these two urban areas, therefore, exceed by 20% of those of the rest of the conurbations of Spain. That same data shoots up to 31% if they face the most expensive areas of the country with the urban area with a lower life cost that, according to the BDE, is Elda-petrer (in Alicante). And if the comparison is between areas such as Santa Cruz de Tenerife or Burgos ("Percentile 75"), and Badajoz or Albacete ("Percentile 25"), the additional cost of residing in the first group of cities is 7%.

The body that directs Pablo Hernández de Cos provides these conclusions after developing a "price index for Spanish urban areas", aspect of which there is very little information available and that makes it possible to know how beneficial is to reside in a large city.

The document does not address aspects beyond the economic scope, that is, it does not analyze variables as the quality of life. Among other things because that is a point that can be a bit more subjective. But it does offer these figures at a time when, as a consequence of the pandemic and the confines, there is a debate, at least in part of society, on the benefits of living in a big city. And what it does clearly point to the text is that "the welfare of citizens depends so much on their income levels and the cost of living that they have to face according to their place of residence."

Date Of Update: 03 August 2021, 18:57

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