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Twice as likely to grow your money if you invest in Valencia. This is partly due to the demand for houses in this area combined with the supply. Read more about it in the Analysis Real Estate Market Valencia 2024 Q2.
General situation housing market Spain
In the second quarter of 2024, the average value of both new and existing homes in Spain increased by 3.1% year-on-year and by 0.5% compared to the previous quarter. This is a slight increase that fits within a stable market. The increase was slightly better than expected, as well as the economic growth. According to notaries, the number of house sales up to April actually increased by 6.4% compared to the same period last year.
However, these are averages across Spain; in tourist areas the increases are a lot higher. Demand remains, but supply is limited. The number of building permits issued also remains at a low level, meaning that housing supply will not increase rapidly in the coming years. This creates continued price pressure in areas with high demand.
More about Spain’s Q2 2024 property figures can be found here.
Property prices Valencia vs. other regions in Spain
As mentioned, the rise in house prices in Spain is mostly visible in tourist areas. What does this mean for the Comunidad Valenciana? This region consisting of three coastal provinces clearly falls into this category, although there is a mutual difference between the provinces. There is more tourism in the provinces of Valencia and Alicante, for instance, and this is directly reflected in the price pressure.
Whereas year-on-year most autonomous regions are in the 2-5% price increase range, this is 6.7% for the Valencia autonomous region. The outliers are in the province of Valencia (6.0%) and Alicante (9.3%). Here, Valencia province is greatly influenced by the popularity of Valencia city. In Alicante province, it is especially the sought-after Costa Blanca North that pulls the numbers.
House prices Valencia city by neighborhood
Valencia city shows annual variations over 10% in 13 of its 19 districts. The variation range is between -3.0% in Rascaña (the only negative annual variation) and 21.4% in Jesús district. Above 15% are also the districts of Poblados de Oeste and Benimaclet.
There are now no fewer than nine districts where the average square metre price is above €2,000, namely L’Eixample, Extramurs, Campanar, Quatre Carreres, Camins al Grau, Algiros and Benimaclet.
Ciutat Vella, or the historic city centre, is the only district with a square metre price higher than €3,000. By comparison, Madrid’s most expensive district, Salamanca, reached a record average of above €6,000 last quarter. And let’s not even mention the most expensive district or for example London or New York City. Or maybe we should: Knightbridge in London £ 19.440/m² (€23.085,40/m²) and Hudson Yards (Upper West Side) in New York City $ 1.500/Sq ft (€16,146/m²).
Return on rental Valencia
The gross rental yield in Valencia city is 7.9% on average. To calculate this, the return over a 5-year investment (Compound Annual Growth Rate, or CAGR) was considered. By comparison, the CAGR of other major cities are Madrid 4.7%, Barcelona 1.8%, in Seville 4.3%, Zaragoza 5.0% and Malaga 6.8%.
The districts with the highest yields in Valencia, are Poblats Marítims (including Cabanyal), Jesús, Quatre Carreres, Benicalap, Campanar and L’Olivereta, with rates between 8.3% and 11.2%.
Conclusion real estate market Valencia 2024 Q2
There is little supply and a high demand in Valencia, adding to price pressure on the housing market. Mainly Valencia city is facing scarcity, both in the purchase and rental market. This presents two opportunities for property investors: 1. invest in a property in Valencia that will become more valuable in the coming years, and 2. invest in a property in Valencia to earn returns from medium- and long-term rentals. Of course, these two opportunities can also be perfectly combined.
Interested in investing in Valencia, or other questions about real estate in this region? Feel free to put all your questions to one of our colleagues. The contact details can be found here.
Source: TINSA
