More Houses Are Currently Being Sold In The Valencian Region Than In Cataluña Or Madrid
According to the National Statistic Institute (INE) up to August 2023 Andalucía led the numbers of houses sold with 74,136 units, followed by the Valencian Region with 59,917. Total of 364,086 units in Spain. In 2021 the region was in fourth place, however now in 2023 it is second place and ahead of Cataluña and Madrid.
The province of Alicante in the Valencian Region has 52% of the transactions of the complete region. The following are the facts supporting the numbers.
A balanced demand
There is a wide spectrum of potential buyers and as such makes the local market less volatile. Foreign buyers represent a consistent percentage. In the first quarter of 2023, 44,67% of the buyers in Alicante were foreign, not only British, but Dutch, Russian and Ukrainian citizens. These customers are not directly affected by the rise of interest rates in national banks.
To this group of potential clients it is necessary to consider those who do not live in the region but are looking to change houses, for a new, bigger or closer to the sea. Others who could work remotely part of the week and Spanish citizens living abroad currently but thinking to return in the future.
Climate, affordable prices and the leadership of Alicante
Alicante supporting more than the 50% of the total number of transactions in the region and with the percentage of new constructions rising 19% in the last year is a potential sign that the province has broken the traditional seasonal identity related to second summer residencies. Infrastructure such as the motorways and high speed train connecting the province with the rest of the nation, or flights to 120 European cities from Alicante airport, are sustaining this assumption.
The average price in the region, according to web pages of real estate operators, is 1,738 € /sqm, below the national rate of 2,004 €/ sqm. Compared with Balearic Islands 3,987 €/ sqm, 3,139 €/ sqm Madrid, or Cataluña with 2,345 € / sqm, The prices in the Valencian Region are still affordable and have margin to grow. The average price in the city of Alicante is 1,820 €/ sqm, less than Valencia city with 2,278 €/ sqm.
Finally the choice to invest in the region is supported by a temperate climate throughout the year, access to a healthy lifestyle; with a number of possible outdoor activities, and still affordable cost of living.
The profit by investing in buying a house is leaded by the city of Castellón with a rate of 7.1 %, followed by Alicante and Valencia, where the rate is 6%. Even these rates are lower than other cities such as Murcia o Lleida, they are higher than Madrid, Barcelona, Málaga or San Sebastián. In the province of Alicante not only the capital, but San Vicente del Raspeig, Elda, or Alcoy are cities with considerable profitability. It is not only the fact of location, or distance to the beach, but for example immigrants from Eastern Europe or North Africa who have settled in these cities over more than the last 10 years have shown to be strong buyers and investors as well.
The recently elected Valencian regional government is preparing a reduction of taxes related to inheritance and in the acquisition of real estate, which should energize the market and help to counteract an economical and political environment of uncertainty.
The rise of interest rates in the European Union in general and at Spanish banks in particular is certainly the reason for the slowdown of the two main real estate markets in Spain, Madrid and Cataluña – where buying a house has become hardly affordable.
Javier Leonardo Rímolo
Rimolo & Grosso, Architects