Even with the war in the Ukraine, the high inflation, the coronavirus pandemic and increased energy costs, the Costa Blanca area has seen a strong first half year in 2022. Especially foreigners are returning to Spain and looking to buy which has led to price increases among the Costa Blanca. It is notable that currently the supply of properties in the lower budget around 300.000 – 400.000 € has significantly decreased. The great demand for a property in Spain is partly due to the gap in property prices, averaging about 1.825 €/ sqm and in Germany about 3.304 € /sqm. The group of buyers has become younger. It used to be people in their late 50s who bought a holiday home with a view to retirement and used it themselves and rented it out for a while. Those are still there, but they’ve been joined by commuters, younger families looking for a vacation home, and many people buying property as an investment to rent out.
In the second half of 2021, a foreigner was involved in almost one in five real estate transactions in Spain – be it purchase or sale. The General Council of Notaries put the share at 18.6 percent, which corresponds to an increase of 42 percent compared to the same period last year and roughly the shares of the years 2012 to 2019. As usual, the British are ahead with 11.8 percent, followed by the Germans with 10.4 percent, followed by the French with 8.3 percent. The increases compared to the same period last year, which was characterized by the coronavirus pandemic, are interesting: Dutch at 104.1 percent, Irish at 99.3 percent, German: 84.9 percent.
The optimism in the Spanish real estate market is no coincidence. Last year, 565,000 real estate transactions were carried out with a price increase of 6.4 percent, more than at any time since 2007 shortly before the real estate bubble burst.
The construction industry focuses on luxury tourism with most potential in Moraira, Jávea and Dénia. There has been a significant increase of building and sale activity in the high-end segment with Ibizan Style properties. Wealthy top tier clients have discovered the beauty and easy access of the Costa Blanca while having reasonable prices compared to Mallorca or Ibiza. (Source: https://www.costanachrichten.com/spanien/politik-wirtschaft/spanien-immobilien-ferienhaus-billig-boom-costa-blanca-makler-schaich-hannemann-kueste-auslaender-91543137.html )
According to idealista property prices in Moraira have increased by 9,0% on year-to-year basis up to 3.360 €/m2. One of the most if not the most expensive areas on the Costa Blanca is El Portet / Pla del Mar with average property price close to 4.000 €/m2. Since 2011 average property prices in Moraira have grown from as low as 2.103 €/m2 which means property prices have increased by 60% in just over 10 years. Similar growth trends can be observed in Javea. Here the property prices have increased by 12,3% on year-to-year basis up to 2.788 €/m2. Calpe area has experienced an increase of 13,3% in property prices up to 2.469 €/m2. Compared to Moraira the surrounding areas have significant price level gap, leaving buyers opportunities to invest. (Source: https://www.idealista.com/sala-de-prensa/informes-precio-vivienda/venta/comunitat-valenciana/alicante-alacant/altea/ )
Forecast / Trend
With recent developments in interest rates Caixa Bank charges right now interest rates above 3% with a possibility that we see rates around 4% by the end oy the year, it is very likely that purchase in the long run will decline, leaving only buyers with sufficient equity. This in combination with the on-going war, inflation and may be a return of the coronavirus pandemic in Q3/Q4 2022 should eventually lead to a cool down of the property market on the Costa Blanca. This is in accordance with the predictions from the Spanish banking sector. However, Moraira area as such, has a micro market which is most likely to hold its high price levels seen in the past with the finance crisis 2008/2009.