More or less every quarter we put together our report on the goings on in the Valencia Property market. It's time to do it again even if it is a little late as we are almost up to the end of the first third rather than the first quarter. However, as an excuse we have been particularly busy. This week therefore we will talk about who is buying Valencia property through us at the moment, what type of properties they are buying, where they are buying and how they are financing it. We also take a look at the perspectives for the Valencia Property market in the next few months and the rest of the year.
Let's start by sending congratulations out to our colleague Paul and his better half Carli on the birth of Otto last week. Hopefully Paul will be taking a bit of time off so if you are expecting an answer from him over the next few weeks and months then be a little patient.
Our last report can be seen here. In it we talked about the year as a whole and our Autumn 2022 report you can see here. We are going to take the normal route of dividing the report into different sections so you can see the direction of travel.
What Are People Buying?
In the first quarter we have seen a stronger demand for properties from people looking to get the Golden Visa. This could well be because of the potential threat to the GV from both the EU and internal Spanish politics. Almost 20% of our sales have been to people looking for the Golden Visa. All of these properties have been apartments in the city, and half were penthouses. All had a decent sized terrace or the potential to have one.
70% of our sales have been for apartments in the city and 30% outside the city. Of those outside the city 60% have been for investment properties, all apartments, and just 30% for villas with 10% being for town houses.
Nationalities Buying Here
The biggest clients for Valencia Property up to now are the Americans with over 30% of our clients being from the USA. The closest to the USA at around 20% are the UK and then the Netherlands with Belgium close behind. We have also had clients from Lithuania, South Africa, Czech Republic, Bulgaria, Canada, Spain and Hungary and a few other countries where we haven't closed a sale yet such as Hong Kong, Ireland and Australia.
Locations Where People Are Buying Valencia Property
Obviously with the majority of the sales being for apartments in the city the number one destination is Valencia but knowing the areas of Valencia helps too. The most popular area for our clients has been Ensanche but there is a wide spread of areas due to the wide spread of prices, of which more below. En Corts, Plaza de España, el Botanico, Arrancapins, el Cabanyal, El Carmen, Ayora and Monteolivete have all featured.
Outside the city Naquera, Museros, El Puig, Ribarroja, L'Eliana, La Pobla de Vallbona, Lliria and Godella have all been places people have chosen. They are all within 20-25 minutes of the city maximum
Types of Property People Are Buying
Obviously apartments. However requests for villas have been growing as we get into the spring and summer season of warmer weather and swimming pools, we wrote an article about that here. Townhouses are being criminally overlooked. We have written before about the value for money that townhouses offer but it seems that you can lead a horse to water...
Finance and Mortgages
Of our clients over 90% were cash buyers. However in the general market it seems that the vast majority of buyers now are buying with a mortgage and the increase in the mortgage rates is not putting off too many people. Our mortgage partner Mortgage Direct said the following in their latest newsletter.
|"We mentioned in January that we’d had a strong start to the year and we’re pleased to confirm this has continued to be the case. March is on track to be our strongest month ever since the company started 17 years ago. We were at a very well-known trade fair in the UK earlier this month and the exhibitors we spoke with said they had seen the same with their international clients (not just British buyers)."|
Prices of Valencia Property
There was a really weird report yesterday that said that inflation had come down especially in the Valencia region due to a 20% drop in real estate prices. I call serious bullshit here! Yes inflation has come down but that is totally down to factors such as the reduction in fuel prices, VAT being lifted on certain food stuffs by the government and a new competition between supermarkets meaning for example that Mercadona has just reduced prices on 500 products. Property prices have not come down and they certainly haven't come down by 20% (Yet).
We have seen in the last week a campaign by the banks releasing plenty of repossessed property onto the market at low prices but that is because the majority of those properties are in cheaper areas. Anecdotally we know of a property that was priced at 580k last week and sold within a day to one of four offers they had at asking price or above. The top end of the market is very strong still whereas the middle market might be slowing down.
Our average deal price is up by 20% so far this year on last year but that is probably because we have been dealing with a lot of Golden Visa type clients. This is offset by some of our investment clients though so there is a general rise in what is being looked for and prices agreed on but you have to realise that a lot of our clients are bringing their money from places where they have sold at higher prices in inflated markets.
Principal Residence, Second Home or Investment?
Those buying at the higher price points are generally buying for principal residence. Those buying at the lower price points are generally buying for investment purposes. In the middle there's a bit of both. We have a company buying a house in the Cabanyal that is almost certainly for renting it out with a tourist licence. We have people buying properties with the idea of moving in within a few years and in the meantime they may rent out medium term.
Quite a few people are buying as a second home and using the Schengen Visa to visit for 90 days out of 180. However the majority of our clients buy for use as primary residence, and in many cases that may be once we have organised and done their modernisation.
Ongoing Perspectives for the Market
Demand for property in Valencia continues to be strong at the top and bottom ends of the market with people looking to buy and live here and also buy to invest as rental prices have gone stratospheric in the last six months due to the lack of supply, we wrote about that last year with our article about the rental crisis in Valencia. Both the top end and bottom ends of the market are largely populated with cash buyers looking to either live in their purchase or rent it out and get a return on their money but the bottom end also has a lot of first time buyers looking to get their own place as it is cheaper than renting.
The middle part of the market is a bit softer due to the need for mortgages in that area and the rise in interest rates. Anecdotally we are seeing cases where people have put off a purchase because they are currently locked into a really low mortgage rate and that wouldn't be the case if they bought a different property with its own mortgage (You cannot take the conditions of a mortgage from one property to another in Spain)
Cut and paste from the end of the year post because nothing has changed... ok a couple of things have changed, they are in Italics.
Valencia continues to be one of the most attractive destinations for international buyers, one of the reasons is given below. It has a great mix of quality of life, affordability and climate that attracts many people from elsewhere. We are still seeing increases in the demand in 2023 due to the implementation of the Digital Nomad visa, the increased take up of the Golden Visa and the continuous good press that Valencia receives on an international basis.
Just like last year we more than doubled the sales we made during the year and the second half of the year has been just as in demand as the first half. Demand often drops in the second half of the year possibly due to the summer break but this year demand continued to be high especially at the top end of the market. Demand in the first quarter of the year rose again!
So to copy and paste from last year too “We look forward to welcoming you and working for you exclusively as your buying agent in Valencia. Remember to let us know well in advance before coming over and to have calls with us before as we are extremely busy with demand from all over the world. Book your call with us here.” Remember that this is how to work with us here at Valencia Property to get the best results.
Tip of the Week
Scams online continue to abound especially with the rental market being as difficult as it is and where there are desperate people there are scammers willing and able to make those people's lives even more difficult. So today's tip is to never hand over money to a person advertising a property online without having visited it and having made sure that it is their property to rent out. Thus you avoid the scam detailed in our article here about someone who gets an airbnb and then "rents it out" long term usually to many victims. You also avoid the person who then ghosts you and you never hear from them again. Usual caveat in online property applies here, if the property looks too good to be true then it generally is.
How can you avoid this? Well you might ask us about our rental service for example but you also may choose to take a short term rental or hotel on arrival and then hit the streets and try to find something in the first week or two after you get here.
News of the Week - Childcare Costs
We wrote an article last week about the cost of living for people coming to Valencia and comparing that with the cost of living in the States and we have often compared cost of living here in Valencia with the UK. One of the things we were asked about that we hadn't mentioned though was the costs of childcare and a couple of weeks ago the Valencian regional government announced the prices of nurseries for children under 3 for next year. We can then compare this with the UK for example.
The cost of a nursery full time for children in the Valencian region is 34 euros per month. Yes you read that right, 34 euros per month. Private nurseries can go up to 260 euros per month but they still get a subsidy for every child. In the UK nurseries costs on average over 1000 pounds per month and in the USA the average cost is around 1200 dollars per month. So even if you go fully private here the childcare costs are insignificant compared with the UK and USA.
Therefore if you have a baby or toddler you are likely to save over 10k per year just on childcare costs. There was a report in the UK that parents there have to pay up to 75% of their salary just for childcare which of course affects people going back to work after giving birth.
Property Of the Week
This apartment is in Naquera, about 30 minutes outside of Valencia, maybe 20 from the beach, depending which one of several beautiful northern beaches you fancy on any given day. So not Valencia City, but if you thought you were going to get all of the following at this price in Valencia City then you really haven't been keeping up.
Community swimming pool and tennis court, large parking space, 145m2, 3 double bedrooms and 2 bathrooms (including one ensuite). Large kitchen and living area and a proper balcony. Dining table and 6 chairs proper. Views out over the garden and 5 minutes walk from the town centre. Orientation east and west.
Naquera has always been a popular place with Valencians, its a little bit cooler in the summer evenings and catches the breeze as it is a in the foothills of the mountains. Its a lovely town, only 15-20 minutes drive from the American School and Caxton College. Proving again that you don't have to live in Valencia city to enjoy Valencia, and you don't have to spend huge amounts to get a pretty ideal property.
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