Alicante real estate faces a shift as trend changes take hold
In Alicante, the market shows signs of a new trend, despite ongoing resistance from international buyers amid rising mortgage costs. Local buyers are fueling a gradual decline in total housing transactions in August. This marks the second consecutive month of softer activity in the province.
According to the National Institute of Statistics, 4,152 homes were sold in August, a decline of 8.16 percent from the same month last year. Although this result outperformed the national trend, which saw a 14.4 percent drop, it lagged the Valencian Community average, where sales fell by 6.9 percent. This data illustrates a cooling but still resilient market in the region.
For the second month running, after a 9.7 percent drop in July, the Alicante market saw fewer transactions. Yet the year-to-date balance remains positive, helped by a steadier start to the year. There has been a 3.3 percent year-to-date increase, totaling 34,780 deals, driven largely by demand from buyers in Eastern European countries seeking shelter from the regional instability caused by the Russia-Ukraine conflict. The data also suggests there is still room for further adjustments, as the current figure remains well above pre-pandemic levels.
Market observers note that the figures are concentrated in the second-hand segment, where demand remains strongest. In August, 3,501 transactions occurred in the resale market, which accounts for about 85 percent of activity, while new construction rose slightly by 2.5 percent with 651 deals recorded. It is important to remember that many new-home deals are registered once title deeds are formalized, and some projects are sold off-plan years before completion.
Sonneil, the CEO of a real estate platform, points out that there is growing awareness of a marked decline in demand for new, off-plan homes aimed at habitual residence in the province. Those projects that depend on mortgage approvals for buyers are feeling the pressure, while the second home market, which leans more on international buyers, remains more resistant. Industry sources, including data from the College of Quantity Surveyors, support these trends as new promotions slow down and mortgage qualifications become a tighter bottleneck.
The real estate market in Alicante is also feeling the cost of slower activity, with disruptive effects already visible in the second-hand sector. The downturn here is sharper, with August activity down 9.9 percent as local demand tightens around traditional housing options. Industry observers highlight an eroding customer profile driven by higher financing costs, noting that couples may struggle to cover mortgage payments on an average apartment, with monthly costs potentially reaching seven to eight hundred euros. This dynamic helps explain the longer sale timelines being reported by agencies in the region.
An estate agency in Benidorm notes that the pool of potential buyers has shrunk, reinforcing the longer sale cycles that practitioners are experiencing. As the market cools, price expectations and sales strategies are adjusting accordingly, with fewer buyers stepping forward in response to changing financing conditions.
Looking ahead, the Alicante representative for the Valencian Community Real Estate Association predicts that the downward trend could persist, particularly in a climate of higher inflation and rising interest rates triggered by the European Central Bank. Investor demand is expected to soften in the coming months as yields become more selective. Experts suggest that, in this environment, buyers and sellers may see prices stabilize or ease rather than continue a rapid ascent, with some market participants anticipating price reductions as confidence adjusts.
In the luxury segment, demand remains relatively firmer than in other categories. A limited expansion of available high-end stock, still hampered by post-pandemic supply constraints, supports premium pricing. However, even there analysts acknowledge that a moderation in price growth is likely as the market recalibrates in response to global inflation pressures and ongoing geopolitical tensions. The overall forecast points to a cautious tone for the coming year as macroeconomic headwinds influence both local and international investment in Alicante real estate.
Overall, the Alicante market illustrates a shift toward a more balanced supply and demand dynamic. While international buyers show continued caution, local purchasers continue to anchor activity, and a slower but steadier pace is emerging as the market absorbs higher borrowing costs and shifting investor expectations. In the near term, many expect a gradual rebalancing rather than a sharp reversal, with careful pricing and selective promotions likely to define the next phase of activity in the province.