Comunidad Valenciana property market recovers: 93% growth in past year

Nationwide property surveyors and valuers Tinsa say the second-home industry has grown by 93% in the Comunidad Valenciana – made up of the provinces of Alicante, Valencia and Castellón – within the last year, both in terms of sales numbers and prices.

The southern part of the province of Alicante is described as the 'most dynamic' and with the greatest demand from foreign buyers, although Tinsa has ruled out any risk of another 'housing bubble' – the last of which burst spectacularly in 2009 after property reached its highest-ever prices in history in 2007.

Back at the time of the previous 'boom and bust', the mortgage lending system was different and mass building rife, leading to negative equity, owners who could not meet their loan repayments and a massive stock of empty properties, often which were new and had never been owned.

Recovery was delayed in the region because of the high number of empty properties outstripping demand.

But Spain and the Comunidad Valenciana have learnt a lot since then, and the panorama is very different, Tinsa says.

The recovery in the eastern region is likely to continue for 'a good two or three years', since it is not only reflected in prices but also in a recent awakening of construction of new apartments and houses, according to Tinsa.

Given that tourism is the mainstay of the Comunidad Valenciana's economy, it has been the main driver behind the recovery in the housing market, although that recovery has come three years after it started in other coastal areas in Spain – which started to improve in 2016 – and varies vastly according to 'how touristy' different towns in the three provinces are, as Tinsa explains in its report Vivienda en Costa 2019 ('Homes on the Coast 2019').

Around three in 10 holiday homes are bought by foreigners, the largest number of whom are British, although with a slight reduction seen in non-Spanish buyers in the last few years because of uncertainty over Brexit.

Benicàssim, on the Castellón coast – the site of the famous FIB International Festival – saw a typical price hike of 16.9% year on year by the end of the first quarter of 2019, Tinsa's figures show, followed by El Campello, about halfway down the province of Alicante, the southernmost of the three, with a rise in values of 15%.

The greatest price rise in the province of Valencia has been seen in its southernmost town, Oliva, at 11.9%, after many years of being in freefall, followed by Valencia city itself, about halfway up the province.

For Castellón, the most northerly province of the three, the second-highest rise after Benicàssim was seen in Burriana, at 10.9%.

A handful of towns which had already seen homes increasing in value earlier than the rest have shown a slight fall, including in Alboraia (Valencia province), down by 4.2%; Altea (Alicante province), reducing by 2.6%; Vinaròs and Almassora (Castellón province), shrinking by 2.3% and 0.9% respectively, and Cullera (Valencia province), down by 0.1%.

Generally, the most northerly parts of the province of Castellón, bordering Catalunya, saw a slight reduction in home values year on year by the end of the first quarter of 2019, largely because it is lesser known to tourists who seek to become holiday-home owners – despite having the same landscape and facilities as in other parts of the region, its towns are less likely to appear in travel agency windows in northern European countries.

Valencia, however, was the province with the sharpest price and sales number increases, mainly because Alicante had already shown signs of recovery earlier on.

Across the region as a whole, home sales over the whole of 2018 rose by 9.4%, and planning permission for new builds rose by 17.3%, with the highest numbers of these licences seen in the southern Alicante province towns of Torrevieja, Orihuela and Guardamar del Segura.

The region's housing market is heavily dependent upon the economy elsewhere in Europe, given that 31% of holiday homes are bought by foreigners – 27,490 of Spain's 90,713 non-Spanish-owned second homes bought last year were in the Comunidad Valenciana.

Although holiday-home buying rose overall by 10%, a slight shrinking was seen in the number of foreigner purchases, from 32% to 31%, which Tinsa attributes to the 'international macro-economy' and 'Brexit uncertainty'.

Despite Brexit, and despite British buyer numbers falling, the UK remains the largest holiday-home market for Spain, at 17.4% of the foreign purchaser total – although this is a drastic cut from the 23.1% they accounted for in 2015, before the referendum on whether or not to leave the European Union had taken place.

Swedes are the second-largest non-Spanish buyer group in the Comunidad Valenciana, at 8.9%, followed by Belgium (8.2%), France (6.5%), Russia (5.1%), Germany (4.7%), and Norway.

Tinsa's Valencia area manager Vicente Torres says holiday homes continue to be 'a refuge for investors', both for corporate funds and for individuals, given the 'minimal profits' made on financial products in the last few years.

He added that the Valencia regional government's Green Coastal Infrastructure Territorial Action Plan (PATIVEL) was good news and 'necessary', since it prevents overbuilding in towns close to beaches and will eventually lead to minimum percentages of green-belt land being established.

For unfinished developments, the PATIVEL gives the promoters a maximum of five years to complete them, meaning owners will no longer be fighting for habitability licences and necessary public facilities years or even decades after buying their homes, and has rendered several building plots 'green-belt'.

Some coastal towns are fighting elements of the PATIVEL, where individual investment in building land could be lost by its being reclassified, but on the whole, it will prevent excess development and protect coastlines from future erosion by the pressure of urban sprawl.

Photograph: Three-bedroomed villa for sale in Guardamar del Segura, southern Alicante province