Valencia’s Real Estate Market Slows After a Fast Burst of Growth
Across the Valencia region, the once-fierce rise in home values and sales has cooled. After years of sharp gains, the market began to ease in the middle of 2022, with new home prices hitting a regional high. By the middle of the year activity slowed noticeably, signaling a shift from the fevered pace seen not long before. Data from the Valencian Association of Realtors shows that visits to homes for sale have dropped by about a third in the latest quarter compared with the same period a year earlier. Several factors drive this deceleration, including higher prices, rising borrowing costs, and broader economic uncertainty tied to global events and energy markets. In Valencia, rental dynamics mirrored the slowdown, with rents climbing as supply remained tight and demand persisted among those unable to buy at elevated prices.
According to Nora Garcia, head of Asicval, the drop in visits to properties began once interest rates rose in June. The typical mortgage payment on a 150,000 euro loan has increased by roughly 178 euros per month this summer, narrowing the pool of qualified buyers. She notes that the average price of a second-hand home in Valencia sits around 200,000 euros. As prices have risen sharply, the sense of immediate activity from the previous year has faded. Yet Garcia emphasizes that the market remains robust overall, even if certain segments lose momentum. She expects the near term quarterly statistics to show a more muted level of activity, especially in the third and fourth quarters of the year.
Vincent Diez, a representative of the API Valencia Association, agrees that demand has cooled. He points to multiple factors, chiefly the rise in interest rates. When monthly mortgage obligations increase, many potential buyers find their purchasing power squeezed, pushing some toward renting as an alternative. Inflation, along with overall economic uncertainty, further dampens enthusiasm for large real estate bets. Diez notes that uncertainty tends to slow transaction activity across markets, with buyers prioritizing financial stability in uncertain times.
The rental market faces its own pressures. With supply stretched and rents rising, more renters consider shared arrangements as a practical solution. Garcia notes a trend of three to four person rentals becoming more common as households share costs. A typical Valencia apartment that cost around 800 euros annually before has climbed to about 1,200 euros, underscoring how price pressures change living arrangements for many tenants and future buyers alike.
Cristina Recasens, founder of Recasens Real Estate, observed a clear slowdown in activity during the summer. Inflation and the broader economic environment were influential, with mid priced properties feeling the most noticeable impact. The market has not collapsed, but there is a palpable sense that some buyers are waiting to see if prices retreat before committing. Elizabeth Andrew, director of product at Percent, expects banks to tighten lending criteria in light of continued rate hikes, potentially restricting access to credit for buyers who still face affordability hurdles. In this climate, buyers and lenders alike recalibrate expectations, balancing the desire for favorable returns with prudent risk controls.