Signs that Valencia’s property market is overheating

Signs that Valencia’s property market is overheating come with the fact that flats up to 240,000 euros last only five hours on the market. Eugene Costello reports

Signs that Valencia’s property market is overheating come with the fact that flats up to 240,000 euros last only five hours on the market, the Association of Real Estate Agents (API) of Valencia reports. It is a “bubble” caused by foreigners wishing to move to Valencia. And a surge in the number of would-be professional landlords, according to its spokesperson Vicente Díez. Especially those planning a business around short-term lets as Valencia grows massively in appealing to tourists. Yet again Valencia Airport showed a record number of incomers and tourists for April, at 945,000 people.

This is the worst it has been for 17 years, says Levante-EMV. It reports that agents are also stating that access to finance and mortgages is the worst it has been since then.

Levante blames foreign buyers largely. It says, “Buyers looking for flats in the districts surrounding Ciutat Vella, such as Extramurs, are buying without time to reflect on the plummeting supply.

“The property market in Valencia is out of control with demand driven by foreigners far outstripping supply. Flats close to the centre for up to 240,000 euros last five hours,” it says. Rental prices are also shooting up beyond the reach of the majority of locals.

Property market overheating, especially in the city

It singles out flats in the areas around Ciutat Vella and Extramurs as particularly problematic.

Contacting estate agents with properties for up to and around 240,000 euros in some neighbourhoods is a mission. Neighbourhoods such as Petxina, Botànic or Arrancapins. The demand is so strong that many estate agents do not bother to reply to emails from interested parties. These potential buyers discover that the flat is no longer available a few hours after the publication of the advert that they see via an alert from the Idealista platform. It is a very frustrating situation for buyers.

For Levante, the API points to areas further away from the centre, such as the final stretch of Blasco Ibáñez, where flats of 90 square metres are “flying” at 200,000 euros. “You can’t find homes for less,” warns Vicente Díez. The API spokesman believes that when flats are sold in hours it is because “they have been sold at too low a price”. This is a worrying signal because it suggests more price rises when the market is already at boiling point.

Rents are also rising beyond the reach of locals

All of this relates to properties that have found their way to market, albeit for only a matter of hours.

Cristina Recasens, director of Recasens Real Estate, speaking to Levante, acknowledges that it is very difficult to find homes for 250,000 euros in neighbourhoods surrounding the centre. “Before, the range was 180,000 euros. But now in neighbourhoods such as Arracanpins, Botànic or Zaidía the price has risen sharply.”

And she warns that practices making your property search even harder are appearing. “In some areas it is the concierges or the neighbours themselves who act as intermediaries. I know of 90 square metre flats with garages that have been sold for 220,000 euros. These are properties that have not even been on the market”.

Biggest rises in 17 years

According to a Fotocasa Research study released last week, the purchase price in the Valencia Region has risen by 12.8% in the last year. The average cost is 146,800 euros for a flat of 80 square metres. That is far lower than prices in the city. Paradoxically, the housing market began its exponential increase in price coinciding with the first rise in interest rates in 2022, according to Fotocasa analysts. This trend of accelerating growth has been going on for at least one year and four consecutive months. It represents the highest rate of increase in the cost of housing in the Valencia Region in the last 17 years.

Boom in foreign demand

“We have never seen such a large price increase over such a long period of time,” says María Matos, Director of Studies and Spokesperson for Fotocasa.

This rise brings us back to 2006 levels before the housing bubble when the cost of housing suffered a great warming, she says. These significant increases coincide with the ECB’s monetary policy change of raising interest rates. This has led to a boom in the demand for foreign purchases, and local demand has specialised and is focused in many cases on purchases for investment. A situation that complicates access to housing, as the region has practically no public social housing supply, which further aggravates the difficulties, she adds.

Anecdotally, residents of the city have started pointing out graffiti outside houses that have been bought to rent to foreigners for short-term rent, such as Airbnb. One enthusiastic graffitist has left “vuestro paraíso = nuestra miseria” on numerous streets around my neighbourhood and into Monteolivete. The laid-back Valencianos in my local terraces, who normally avoid discussing politics, are now beginning to talk about “the guiri problem” and its effect upon housing prices. Sure, we are a long way from the street protests and demonstrations seen in, say, the Canary Islands, widely reported. But it is certainly beginning to start. Locals are angry that prices are way beyond their reach, given that the average salary here is 32.597 euros.

In summary, if you have already bought a property in Valencia, no need to worry. And if you have not, if your budget is fixed, you might need to cast your net search further, towards Gandia, say, or Xátiva…

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