A brief summary of the evolution of the Alicante real estate market 2008-2023
Anyone who follows the real estate market in Alicante knows by now that after the 2008 debacle, house prices fell to their lowest in 2010, and that since 2014-2015 it has been experiencing sustained growth.
At the end of 2019 we expected a home price correction, but the covid appeared and disrupted everything (look how mortgages changed after the pandemic). The readjustment disappeared, replaced by an increase in demand and, consequently, in prices. Parallel to the end of the pandemic, bottlenecks appeared in world merchandise traffic, the first symptom of subsequent inflation. To this was added the rise in fuel prices, the war in Ukraine and finally, with inflation unleashed, the increase in interest rates by the Federal Reserve and the European Central Bank.
For real-estate market It meant a constant increase in the price of housing since June 2021, which increased from March 2022. This leads us to ask ourselves Can price growth be sustained or will there be readjustment? Y, If the readjustment occurs, when will it occur? In the following lines we will try to answer these questions.
Does the price of housing continue to rise?
If we follow the information published in Idealista, we can follow the trend of the last year. At the national level we find that the price of housing increased in the last year (compared to June 2022) by 7%, but as the year progresses the growth slows down, 6% in relation to March 2 and only 4% compared to May 2023.
That is, the price of housing continues to rise but it does so more slowly.
If we compare the data for Spain with the city of Alicante, we find the following. He crecimiento of the price per square meter June 2023 compared to June 2022 is 15%, more than double the national averagehe. The same occurs in relation to March 2023, where the growth of prices in Alicante is lower, but still doubles the growth of the national average.
However, the local Alicante market has begun to experience a correction in the price per square meter, represented by a contraction of -0% compared to May 1.
When will the home price reset happen?
What regulates prices? Supply and demand. If we look at the numbers in the table below, we find the sales of properties in Alicante (including both new and second-hand construction). As we told you at the beginning, it seemed that 2019 was going to bring readjustments to the market, since as prices continued to rise, the number of operations was reduced. Everything that happened from March 2020 changed the market.
And so for 2021-2022 we have sustained growth in housing and prices, in 2022 more was sold and at a higher price than in 2021.
Since we only have data for the first quarter of 2023, we have chosen to take the average of operations. In this way, in 2022 we identified an average similar to 2018 (remember, a growing market), and with a greater number of average operations than 2021.
And at the same time with a contraction in the number of sales of 8% with respect to the first quarter of 2022.
For the positive part, that the price of the house is corrected is a powerful incentive to buy a house. On the one hand, those who could not buy a home because of the price now could do so, and on the other hand, those who are looking to invest can find better returns, since the rental price has not fallen.
On the negative side, 2019 compared to 2018 was contracted 7%, while the contraction in 2023 compared to 2022 is 8%, 23 point higher, which could open the way to a contraction in the market. If so, the contraction in the buy-sell number will continue to increase.