We are getting lots of requests from people at the moment asking us similar questions but one of the most repeated is “What’s happening in the market?” We talked about this in our latest podcast, which you can listen to here, but today we thought it would be an idea to give you even more information about what is happening in the market, what’s happening about the offers, the mortgages, the way we are working and getting everything ready for your Valencia Property purchase.
Let’s start with the current state of the Valencia Property market. Prices are pretty solid at the moment and we are still seeing rises in most areas on average with some properties that have been on sale for a long time dropping in price. This means that the average prices look steady with a tendency to a slight rise. However, you need to know why some prices are dropping.
How Pricing Works in the Valencia Property Market
Prices rise or fall due to no other reason than the vicissitudes of the Valencia Property market and the Spanish property market as a whole. Agencies have been really short of product for a long time now and this means they will generally list anything and it’s the owner who tells them what price they want. Over time there is a tendency for these properies to drop in price because once the owner sees there are no visits or offers and, under pressure from the agency, they will start to drop the price. The tendency is to drop the price by too little so they are forced to do it again further down the line because their original price was so out of line with the market.
An example we saw this week when a client sent us a property that looked interesting, however despite the pictures being great and the property looking interesting the price was mad at around 5000 Euros per square metre when the going rate in that area is around 3000 Euros. This meant the property was overpriced by around 200k in our opinion. The pictures may attract people to see it but the reality when visiting will mean there are no offers. I think the owner wants to get a “low” offer and accept it as the price would still be way above the actual real market value.
Here at Valencia Property we don’t just accept the price the owner wants and list the property unless it’s the right price. Again this is because we work for the buyer not the seller, we are buyers’ agents. By doing this we don’t get overpriced properties on the site and as a result the properties don’t come down in price very often as they are sold relatively quickly, especially if they are in the city.
An example this week is that we went to see a property that the owner wanted us to photograph and, stupidly, we went there without asking the price they expected for the property. We took photos and got back to them saying the property was worth around 200k in the current market but that it wasn’t an easy sale due to the road to get there, the location and the work that needed doing on the property. The owner said they wanted 300k. We haven’t listed it.
Equally, we received a request from somebody this week about their property which they needed a quick sale and, knowing the property, we told them the price they should be selling to get that quick sale. You need to attract people and make it a no brainer for a very quick sale of course. However, they wanted arond 50% more. Now the property could be listed about 20% more than we suggested for a market value sale but, as the owner really needs a quick sale they will have to put it lower otherwise nothing will happen. 50% higher is definitely a no as that’s above the real market values in that area.
Sales Going Through
The first full week back since the summer holidays we made two sales both at asking price. Both clients had to go to asking price because their initial offer was bettered by another prospective buyer. There are lots of people looking in the market at the moment whatever your budget so expect to be paying asking price in the most in demand areas. We have had five signings since coming back, with another due to go through this morning as I publish this. This was all from work done in June and July but the funnel of clients coming through continues apace and we have had plenty of clients making their first visits to Valencia in the last week or so where we have organised their orientation day with the opening of bank accounts, introductions to lawyers, notaries and currency companies and in certain cases mortgage advisors.
And Speaking of Mortgages
We have been asked consistently about mortgages recently in light of the rising interest rates so we went to our colleagues and partners Mortgage Direct to get the latest directly from the horse’s mouth as it were.
These are now mostly only available to clients earning their money in Euros. For everybody else, most banks withdrew the fixed rates altogether. That is the most recent change in August, and they are telling us we will get further updates in mid-September.
Up to now for our American clients we used two banks which were the only ones that would offer them fixed rates. One bank will still do it, but only for mortgages above 500,000 Euros and 20 years with the maximum loan to value ratio fixed at 70%, the current interest rate is fixed at 3.03%. There is no mandatory life cover so it’s not too bad. There is also a better rate available but it is obviously for VIP clients on mortgages over 700.000 Euros. The banks have put the 20 years fixed rate at 2.55%
The other bank has now withdrawn fixed rates altogether, and we can only get them for Euro earners. Fixed rates start at 2.5% on condition the client takes out life cover, home insurance, and house alarm and has a bank account with the bank with regular payments.
Saying that, one bank has started to offer currency mortgages. This is very new, and perhaps it will be an interesting product for some clients. US clients can have a mortgage in USD fixed and up to 70% loan to value. The rates are about 5% for 20 years (I have to say at this point that this sounds like an ouch but in a year’s time it may look decent!)
Meanwhile UK clients earning in Sterling can have a mortgage in GBP fixed for 20 years at around 4% with the loan to value being up to 70%. Clients earning in AUD, BRL, BGN, CAD, HRK,CZK,DKK,HUF,ISF,JPY,NZD,(and more) can still have a 70% mortgage at 5 years fixed at 3.75% with one bank (so another Brexit benefit there with a higher interest rate for the weak pound).
For our clients earning in euros, the cheapest fixed rate with life cover is 2.5% at the moment which is still very decent. The rates go down with the risk to the bank so shorter-term and lower loan-to-value will mean cheaper rates. We are expecting further changes in September.
In general, fixed rates are heading towards 4% but as I am talking to clients from different countries, it seems Spain is still cheaper. In the US fixed rates are now between 6-8%, Germany 8%, and Poland 9% so perhaps this might be a positive point.
Another perhaps positive point is that banks are more open to the subrogation of mortgages further down the line as they compete for clients. This means that if a client takes, let’s say a 20 years fixed rate at 4 % and in 3 years there is a much cheaper fixed rate we can now transfer the mortgage to the cheaper bank. There will be no arrangement fee and the bank pays for the cost and valuation. This might, of course, change a little bit with the demand but it is certainly an option, especially since we think the rates will start to go down again within the next few years.
*The cheapest variable rate with life cover is Euribor + 1.74% which isn’t a great deal if you think that interest rates will rise and continue to be high.
How We Are Working
We continue to work for people as buyers’ agents. Our website continues to develop as we put more and more information into the public sphere and list more properties to give you more choice when you are looking for your ideal Valencia Property. We are also starting to develop the website in other ways. You may have noticed the changes on the main website with more concentration on the latest listings, an increase in the number of properties on the home page and search pages, the incorporation of favourite blogs onto the homepage and more.
We will be making more changes this month too with a few surprises upcoming which we will also be blogging about further down the line. What do you think we will be incorporating into the site and what would you like us to include? Tell us in a message either via whatsapp or mail.
Golden Visa Property Of The Week
We really like this place in L’Eliana. It’s always good when there’s an established large garden too.
Here’s a cheerful and colourful Villa, filled to the rafters with the signs of the busy modern family, boogie boards, padel boards, fishing rods, mandolins, piano, harp, gymnasium and sauna, art studio, thousands of books, dartboard and even a shelf of scary dolls, it reads like the prize list from Bullseye*. You name it, these owners do it, and I’m sure many years of strenuous activity has worn them out so they need to sell, downsize their lifestyle and put their feet up.
Take away all these items and you are left with one big villa in a fantastic area of La Eliana, Montepilar, close enough to walk into the town and hop on the metro for trips to school, Valencia and even down to Cabanyal if you are in no rush.
6 Bedrooms, 3 Bathrooms, huge living areas and kitchen, laundry, basement, garage, a loft style study rumble room on the top floor, a large established garden with pool and lovely barbecue area, it comes with central heating, A/C , double glazed tilt and turn windows, (just ask), mosquito screens, ceramic and parquet floorings throughout, a cool retro fireplace and everything is excellently maintained. Phew, what a great place, I think I need a lie down aswell.
*Popular sunday teatime gameshow in the UK about a hundred years ago.
Apartment of the Week
There’s a strong chance that you’ve read a lot about Valencia, or been here already and identified it as a place to invest or live and enjoy all that the city has to offer, you may come prepared knowing exactly what you want and where you want to be, ready to hit the ground running and change your life for the better, we agree, homework reaps it rewards and the better equipped you will be to slide right in and find your ideal place, however, the chances you will find the “Perfect” property are very slim, compromises are a fact of life and whatever the budget there will always be pros and cons to any property, probably the best advice is to come with an open mind, our clients who have made Valencia a permanent home all have one thing in common, they’re optimists.
So on to the property, 3 bedrooms, 2 bathrooms, living room, and independent kitchen wrapped up into a duplex apartment in a wonderful location, with every possible square metre taken advantage of and maximised, high ceilings in the living room afford it some extra light, given that its a 1st floor that’s probably for the best, and set in a bustling square near central market its not the quietest of neighbourhoods, but that’s not going to bother a Pollyanna principle force of nature like you is it? You’ll probably be out there getting on with your exciting life, meeting new people and thanking your lucky stars you made the leap and moved to Valencia.
Very interesting and if you send us a cheerful email I’ll tell you more about it, keep thinking those positive thoughts, and come and join us.
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