An Analysis of Spain's Property Prices Q4, 2020
In the fourth quarter of 2020, average property prices in Spain displayed a 0.7% decrease, along with a year-on-year decrease of 1.7%. Tinsa bases these averages on completed property (new and resale), which show an average value of €1,351 per square metre.
Prior to the pandemic, property prices were on the rise, with the first quarter of 2020 showing a 0.7% increase, compared to the final quarter of 2019. However, due to COVID-19, average figures indicate a 2.4% decrease between the first and final quarter of 2020. Prices began to decrease in quarter two due to the state of emergency, which caused a significant shift in market dynamics and consequent market values. As such, in quarter four, almost every region had experienced both a year-on-year and pre-covid (quarter one) decrease.
Moreover, each quarter, average figures demonstrated varying decreases compared to the quarter directly before. For example, across Spain, the quarter four average represents a 0.7% decrease compared to quarter three. However, quarterly differences vary between different regions and provinces.
Before COVID-19, both Valencia city and province had displayed notable property price increases in recent years. Despite this, average prices were still half of those in Barcelona and Madrid. As a result, Valencia continued to boast a competitive property market for buyers looking for a good return on investment. Of course, due to COVID-19, Valencia also experienced a decrease in prices throughout 2020: in quarter four, Valencia province saw a year-on-year decrease of 6.6% (lower than the national average). As a result, the average property price in Valencia was €997 per square metre. However, despite some more significant adjustments nationwide, Valencia’s average property price remained lower than the national average.
Valencia city experienced a year-on-year decrease of just 2.1%, compared to Barcelona’s 5.8% decrease and Madrid’s 6.3% decrease. This indicates that the city’s property market maintained some stability, even in the face of a global pandemic.
What is more, property prices are expected to stabilise further as the vaccine is rolled out and COVID cases decline (if there’s a sustained downward curve). The consensus among financial experts is that the market should resemble its pre-pandemic state by 2022. Moreover, these forecasts are similar for the whole of Spain, meaning that we can expect Valencia’s property market to remain extremely competitive post-pandemic, especially when compared to Spain’s other major cities. For example, even in quarter four, when prices had experienced a sustained decrease, Barcelona’s average price was €3,160 per square metre. This is more than double Valencia’s average of just €1,439 per square metre.
The above figures imply that Valencia’s property market is now extremely affordable compared to other cities. Moreover, as financial experts forecast a return to pre-pandemic prices by 2022, there is currently massive ROI potential. It is also worth considering that Valencia city has displayed impressive stability, even when faced with a global pandemic. Therefore, there is significant investment potential for those considering Valencia city.
Different Districts in Valencia City
Despite an overall decrease, property prices continued to rise in some parts of Valencia city throughout the pandemic. For example, Ciutat Vella (the old town) experienced a 9.5% year-on-year increase, and Jesús achieved an impressive 11.4% increase. This can be attributed to these areas becoming increasingly popular among foreign buyers, both for investment purposes and those seeking a better lifestyle. For many, COVID-19 was a reminder that we shouldn’t delay achieving our dreams; whether you’re looking for attractive investment opportunities or seeking a relaxed life in the sunshine. As such, this is what these price increases display.
Although we remain optimistic about Spain’s (and specifically Valencia’s) property market, we know that it is also important to be realistic in such unprecedented times. If and when COVID-19 numbers experience a sustained decrease, we don’t doubt that the market will stabilise and eventually resemble pre-pandemic numbers. However, it is difficult to tell whether the forecasts of ‘normality by 2022’ are entirely accurate. Nevertheless, Valencia’s property prices remain very affordable by city standards. Moreover, financial experts are confident that the city’s property market will eventually overcome this market downturn once the end of the pandemic is in sight.