Slowdown in the real estate market is already affecting international demand. The number of second homes in Alicante province represents more than half of total transactions. If last year’s initial rate increases didn’t hit a customer base that often does not require financing, the loss of purchasing power and ongoing uncertainty among European middle classes have also weighed on activity. The economy took a hit among these buyers in the third quarter, as they reduced property purchases on the Costa Blanca by 14.3%.
Valencia Notary College data show that 6,817 houses were put on sale by citizens of other countries in the province between July and September, a decline of 1,140 compared with the same period in 2022 and the 14.3% decrease mentioned above. A gradual easing of declines is seen in the data compiled since the first nine months of the year, totaling 22,588 transactions, only 5.65% fewer thanks to solid results at the start of the year. [citation: Valencia Notary College]
An apartment on the beach is 55% more expensive than a normal apartment in Alicante
Although the situation remains better than the national segment, the trend has contracted 17.2% in the third quarter and 13.6% for the year to date. This is a worrying sign, especially since residential tourism is one of the region’s largest economic engines. It directly impacts real estate transactions and also influences buyers’ spending on other goods and services during their stay at the property.
In this context, the decline in activity through September shows a 345 million euro drop compared with the same period last year, when foreigners invested 4 billion 334 million euros in total sales and purchases. This year, investment stood at 3 billion 989 million euros.
Deputy dean of the Notary College Delfín Martínez, from Alicante, attributes these data to inflation and worsening European economic conditions. He notes that purchasing power among the continent’s middle classes has weakened and, above all, they are exercising prudence. “There is less joy,” summarizes the representative of Alicante notaries. [citation: Notary College of Alicante]
Countries
Nationality data reflect how uncertainty affects different markets. The United Kingdom remains the top international client for regional agencies, with 964 homes purchased in the third quarter and 2,985 year to date, marking declines of 21.1% and 17% respectively. [citation: regional real estate data]
House sales in Alicante fell for the second month in a row, confirming the change in trend
The decline is even more pronounced among some markets. Germans bought 26% fewer homes in the last quarter (490 operations); French purchases fell 27.6% (312). The Swedish market, which was the second most important previously, now accounts for just 318 transactions after a 37.2% drop last summer, while Belgians remain the best in resilience with 700 properties in the third quarter, only 1.8% down from the previous year and a positive yearly balance of 7.7% with 2,374 transactions.[citation: regional market analysis]
Dutch buyers also saw declines, down 9.8% and 7.9% respectively in the quarter, but still contribute to a positive picture among international buyers. Russians and Ukrainians continue to be affected by migration pressures from conflict, facing slower growth. In the first nine months of the year, Russians purchased 1,022 homes, up 38.8%, yet growth slowed to 9.7% in the third quarter. Ukrainians added 1,046 transactions through September, up 47%, with recent momentum at 8.3% increase. [citation: regional demographics]
The real estate hold-up has already cost Alicante more than $200 million
From the Provincial Supporters Association, Provia, the figures are placed in context against the best year on record. The market is adjusting to a more normal pace, according to general secretary Jesualdo Ros. Ros says there are no concerns among businesspeople and that the slowdown could even benefit companies, as many have run down stock due to intense sales activity. Banks have begun to loosen mortgage lending again, and Delfín Martínez predicts that late-year figures may show a partial recovery as banks re-open the mortgage tap. This approach aims to balance lower loan balances on banks’ books with higher repayment flows from borrowers. Many will opt for a hybrid mortgage to reduce the impact of rate increases. [citation: Provia / Notary College]