Pedro Soria, Commercial Director, spoke at Inmoforum held at the Alicante Archaeological Museum (MARQ) last Wednesday, emphasizing the strong case for investing in Alicante’s residential real estate. The second home market remains a reliable anchor for activity, but the door is open for broader opportunities in the city and province.
– How is the Alicante real estate market performing this year and what about home mortgage appraisal activity?
The Alicante market has progressed with steady momentum in recent years, evolving into a model of growth and expansion. While resale homes have attracted the bulk of transactions—consistently around 90%—new construction sales have picked up as the market recovered. Quality properties are increasingly in demand, with detached houses in the province drawing interest from buyers with greater purchasing power.
– What is the future outlook in the near and longer term?
The housing market in Alicante remains robust, dynamic, and fundamentally solid, with favorable short-term prospects. Yet geopolitical tensions, inflation, and rising interest rates introduce uncertainties that may temper current demand and slow growth. The challenge will be to sustain sales momentum, particularly in foreign markets, while maintaining a healthy supply pipeline that supports ongoing activity.
There is a clear trajectory toward a measurable impact in the medium term. Demand may ease at times, but a strong rebound is expected. In a market with broad demand, it is essential to ensure a sustainable and stable supply to meet future needs.
– After the 2020 slowdown, why did the coastal market rebound?
The coastal housing market in Alicante reactivated once mobility restrictions ended, returning to pre-pandemic activity levels. This segment remains highly dependent on foreign demand and is strongly linked to second-home purchases. Coastal municipalities account for a substantial share of sales and visas within the province, shaping a large portion of the market’s dynamics.
In 2022, coastal municipalities saw about a 2% rise in average prices, a 45% increase in sales, and roughly a 1% uptick in visas, underscoring a robust recovery in demand, albeit with some slowdown in development activity after previous highs. The coast continues to attract major developers, with projects centered in Benidorm, Orihuela, Torrevieja, Sant Joan, Jávea, and Dénia.
– Have 2019 activity levels recovered?
On an annual basis, 2019 levels have been surpassed. In the first half of the year, foreign buyers registered approximately 16,000 housing transactions, up about 33% from the first half of 2018, when foreign purchases peaked in the past decade.
Regarding development activity, new building permits in 2021 remained about 10% above 2019 figures for the province as a whole, with coastal municipalities showing a slightly lower but still positive trend, despite growth slowing versus 2020.
– Is there a noticeable gap between new construction and resale prices?
Even amid strong demand and rising prices, a noticeable gap persists between new builds and existing homes. Supply shortages and faster demand for new construction create bottlenecks, while higher material costs and labor constraints push prices higher, dampening some demand for the resale market. With the broader economic backdrop and higher interest rates, resale prices are expected to adjust more moderately and may diverge from new construction prices, which could push some buyers toward the second-hand segment or, alternatively, toward new builds when incentives align.
– How does this shape consumer decisions?
Rapid demand recovery, coupled with supply constraints, pushes prices up. Inflation and higher interest rates affect affordability, reducing the capacity of many families to buy and potentially shifting some demand toward investment properties, rental housing, or tourism-oriented dwellings. Still, a measured adjustment or slowdown in price gains is anticipated as the market absorbs these changes.
In many cases, the investment angle looks stronger as a hedge against inflation, with rental demand remaining robust and tourism-related moves reopening. Investors may see a steadier path for rental yields and property value stabilization as the market recalibrates.
– Is it a good time to buy a home in Alicante?
Buying a home is a personal decision that depends on individual circumstances. Prospective buyers should assess both the micro-market nuances and the type of property involved. In addition to primary residences, there is ongoing interest in long-term rental and vacation rental investments across various formats.
While financing conditions may tighten with rate increases, overall demand remains active and there is little indication that prices will fall sharply in the short term. If considering a new-build, remember that the market volume is smaller and the overall supply is tight, which can translate into limited availability and potential price pressure in the future.
Ultimately, the question of whether Alicante is a good place to invest in residential real estate yields a confident yes. The investment market highlights housing as a stable haven, with strong rental demand, while the revival of tourism broadens opportunities for vacation rentals and related activity. Source attributions: Inmoforum, MARQ