Accommodation prices in Valencia are shooting up by up to 37%, and not – as many claim – solely because of foreigners, says Eugene Costello. Prices are surging even in those areas with exclusively Spanish purchasers, a new survey finds…
Renting is becoming impossible in Valencia, if the many tortured and anguished pleas seen in numerous Valencia message boards and Facebook groups are to be believed. This is not news to anyone who has been looking for a flat or a house in recent months to live in the city. And now these feelings are justified by a new report into the market, The Real Estate Market Report 2022-23 prepared by the consultancy firm Engel & Völkers and based on actual prices. It concludes that over this period rent rose on average by 37% in the centre of Valencia, and by almost 30% on the outskirts and suburbs.
The growing demand for housing in the face of increasingly scarce supply has put the rental market on the ropes, against a background where the rise in interest rates is making it difficult to buy a home, says Valencia Plaza. This tension has pushed the cost of rents in Valencia to historic levels.
Only four districts have managed to keep their prices below 10€ per square metre. These are: Patraix, Rascaña, La Saïdia and L’Olivereta. On the other hand, four others have climbed above 15 euros per square metre, with Extramurs, Poblados Marítimos, Ciutat Vella and Algirós leading the way, closely followed by Poblados del Sur and Eixample.
Engel & Völkers’ tenant profile is mainly foreign, giving some cause for complaints that foreigners are driving prices up, though closer analysis suggests this might not be the case. However, 74% of the leases managed in 2022 in the capital and 62% in the surrounding areas for Engel and Volkers were to incomers. The firm says, Ukrainians accounted for 18% of foreign rentals in the city and 14% in the outskirts, followed by Italians, Germans, Argentinians and Russians. The districts chosen by the Ukrainians were Jesús, Algirós, Camins al Grau, Extramurs, Quatre Carreres and Poblados Marítimos.
A similar outlook for purchasing
With regard to purchases, the average price of homes sold by the consultancy firm in Valencia in 2022 recorded an increase of 7.6% to 2,585€ per square metre. A level that, despite the rise last year, still represents a fall of 32% compared to the highs of the real estate bubble of 2008. This places the València market, as they point out, as very attractive compared to other large Spanish cities.
The highest average prices are still concentrated in the centre and the old town. Here, the supply of housing is much lower and the price per square metre is well over 2,500€. The average cost of transactions managed by the real estate agency in Eixample has barely changed in 2022. It remains slightly above 3,100€. However, it has carried out some transactions in this district that have exceeded 7,000€ per square metre. And in Ciutat Vella, Benimaclet and Extramurs it has closed some at over 5,000€ per square metre.
Engel & Völkers’ transactions with foreigners in 2022 have equalled those signed with nationals. It grew to 48% of the total from 35% last year. Germans (10%) dominated the international presence in the Valencian real estate market. Next were French (6%) and American (5.4%), at least among Engel & Völkers clientele. The districts most in demand by international clients were: Ciutat Vella, Extramurs, Eixample, Patraix, Poblados Marítimos, Camins al Grau and L’Olivereta. On the other hand, in Poblados del Oeste, Jesús and Algirós, 100% of sales were made to Spaniards. This suggests that it is inaccurate to single out incomers as causing this spike.
At national level, the government is trying to introduce rent caps, though clearly they are not working in Valencia. The regulation now envisages that rents in stressed market areas will be regulated and capped. This is regardless of whether the properties are owned by large landlords or small landlords. And it applies to both contracts for properties already on the rental market and for new contracts, says El Mundo.
The real estate expenses and fees incurred in renting a property will always be paid by the owner. “The real estate service is provided to the owner, and therefore it will be the owner who will have to assume the expenses that this service generates”, the agreement states. Until now, this obligation only applied to large landlords.
To prevent landlords from seeking alternatives that would allow them to compensate for these expenses, the text also prohibits increasing rents by means of new expenses “that would oblige tenants to pay community costs, rubbish charges or any other expenses not attributable to the tenant that were not previously agreed”.
“This avoids a possible avenue for fraudulent rent increases under these excuses”, they point out. In relation to this, the clauses that allowed the non-application of the measures contained in the Law if there was an agreement between the parties are eliminated.
“The elimination of these clauses closes another possible avenue of fraud and protects tenants and those seeking a new rental contract”, the agreement points out.