Spanish residential rental yields are rising and the average gross rental yield is now 4.08%, up from a low of 3.29% in June 2008, according to new figures from the Bank of Spain.

However, gross rental yields in Spain still have a long way to go to reach their previous peak of 6.53% in December 1998, when the Spanish property boom was just warming up.

While the average rental rate in Spain is actually falling, it has not been dropping as fast as property prices, which have now more than halved since their peak in 2007, according to a new report by the University of Pompeu Fabra in Barcelona and Tecnocasa – a property company.

Based on a sample of transaction prices in Spanish cities including Barcelona, Madrid, Malaga, Seville and Valencia, the study found that house prices have fallen 53% since the end of 2006, from €3,500sqm to €1,633sqm. Over the past 12 months to the end of June, property prices in Spain fell by almost 21%.