Update on the Costa Blanca Property Market – Winter 2021/2
Alex Radford, Laura Albors Jover and Chari Rodriguez of the My Lawyer in Spain team were joined by Paul Payne of Masa International and Cameron Hamilton of Five Real Estate in an update of the Costa Blanca Property Market.
How did 2021 fare?
Cameron advised that overall it was a very positive year given covid uncertainty and travel restrictions. Five Real Estate started with 3 branches and closed the year with 7. They increased sales by 200% year on year in 2020/2021 with November being a record sales month (in line with Spanish data). Listings are also at a record level.
Paul concurred and said that whilst there had been a stop start there was a lot of interest. In second half of the year the market caught up and from summer time to December it was a tremendous year for sales. People started to bringing plans forward plans to relocate to Spain. Early indications are that the property market will continue to an even higher rate.
Where are the current hotspots?
Whole area of the Costa Blanca is proving to the a hotspot for both Agents.
- Costa Blanca South is seeing high volume of sales transactions particularly
- Ciudad Quesada ( either move full time or holiday home market)
- Villa Martin has a very active market
- San Pedro to a lesser degree with new homes on the beach
- Costa Blanca North is seeing less volume but higher value/price sales, especially around the Javea area
- New area behind Benidorm called Sierra Cortina with new homes is coming up too.
Paul mentioned there was a shift in spending. Previously people were looking for small properties with a view to then upgrading on retirement. People are now skipping that stage and buying higher value homes and villas, especially Brits.
What are prices doing?
Over the long-term data indicates that prices are on a slight upward trajectory but as far as 5 Real Estate have seen they are fairly static.
In 2020 the pandemic caused a drop in pricing due to reduced demand (travel & health). As restrictions eased in 2021 and demand was on the rise, prices started to recover to pre-pandemic levels. with Sellers receiving 90+% of asking price. The average sale price increased from 2020 to 2021 but that was in line with their expansion into the NCB where property prices are significantly higher. Looking forward certain economic factors may influence prices i.e. increase in inflation and interest rates. What may impact the resale market is the costs of building materials and labour costs have pushed up prices of new homes.
Paul of Masa International advised that key ready stock is very low due to demand and limited move into homes. Developers are now paying more for land and materials which has caused a definite increase in property prices. There is now a gap between new and resale prices. Clients are looking for modern homes. with 90% chasing 10% of what is available.
Who are the Buyers?
UK Nationals remain the strongest buyer nationality buying in the area although there was a slight drop off due to the pandemic, Brexit and non-resident buyer. However this did recover last year. Many UK Nationals are still trying to circumnavigate rules. One area impacting UK Nationals, according to the data, is non-resident second-home buyers (post-Brexit). Due to the GBP strengthening at 6% as well as low interest rates for borrowing, the period between January 201 and 2022 has been a great time for people to buy.
There has also been an increase in other European buyers including German, French and Scandinavian buyers
In Q3 of last year for the first time the UK Nationals were the second biggest group of foreign buyers, behind the Germans.
In Masa’s opinion, traditionally over last 5 or 6 years, Belgium buyers have been the biggest and taken hold of market as well as Scandinavian buyers.
Advice to Buyers and Sellers
- Buyers: Come prepared with your brief
- Have clear boundaries and omfortable price range
- work out financials
Paul said new properties offer a very limited acceptance of reduction in offers. Sellers know its a good market on resales but something can be worked on. Sometimes for the turn key properties you can negotiate to include certain items. Most importantly is currency – take advantage of the stronger GBP. As 4 to 6 weeks is a natural time from offer to completion the market is moving quickly. In the early part of 2022 there were bargains to be had but prices are going up.
- Sellers: there are only 2 things a seller can influence and that is price and presentation.
- Ensure your property is presented well, uncluttered and priced according to the market.
- Think about your banding on pricing as the higher you go naturally less people available in the market
- Market your property with a proactive estate agent who will market your property extensively
- Buyers: Do research and make sure to analyse comparable property prices
- Watch out for changes in tax i.e. property transfer tax (associated costs to buying)
Alex Radford also commented about the costs of purchase in the Costa Blanca as on a new build the buyer has to pay VAT at 10% + 1.5% stamp duty + Legal fees. He recommended allowing for 14% for brand new property on top of purchase price. On a resale, Transfer Tax is payable at 10% so fees around 13%.
If you are apply for a mortgage in Spain contact an independent mortgage broker beforehand to find out how much you can borrow and need to add on top of the expenses. Generally banks are lending around 60/75% typically a lend, which means you would need a 40% deposit, plus 14% costs so to put down 54% of the purchase price.
Where possible, do visit the area at different times of year to see differences in market before you buy.
Impact of Brexit means that unless the buyer becomes a resident, they are limited to 90 days in 180 days. If they wish to become a resident, they can obtain either a Non Lucrative Visa (i.e. not work in Spain), or apply for a Golden Visa and invest 500,000€ in a property/business in their own name. This amount needs to be mortgage free, so they can live and work in Spain.
For more information about VISAs visit our Youtube channel.
Challenges for 2022 and what’s in store?
On a positive side, Cameron said “as international geographic mobility recovers and the level of confidence regarding the control of the health situation increases, foreign demand will continue to grow, contributing to maintaining high levels of residential real estate activity.”
- Less covid restrictions and increased travel (Feb 11th no more day 2 testing for fully vaccinated)
- Spain and UK leading the way for a buoyant 2022
- As inflation rises the cost of raw materials will rise which may cause the cost of new build properties to go up
- Demand for modern homes means there are not such long competition times.
Summing Up
Paul Payne from Masa International said the Costa Blanca offers a well balanced market. The resale sellers are as usually having a built-in anticipation of any offer although they are smaller than before. There are plenty of buyers in the market. Prices are increasing steadily. However, as a word of warning, don’t come to Spain to buy a property to make money; it’s more about lifestyle choice.
Cameron Hamilton of 5 Real Estate comments that at the tale end of last year, the volumes of transaction skyrocketed and this evened out during the lockdowns. Properties are now priced well and according to the market rates and if presented well, they do sell. Pretty positive market.
Join our next session to hear about the Property Market on the Costa del Sol.
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