Housing market optimism despite uncertainty
Some builders have sold or reserved almost two thirds of their new homes
THE SAFE-HAVEN value of property and a predicted economic recovery have buoyed the housing market in Alicante province, with 67.3% of businesses confident that demand will remain stable and 96.2% not cutting prices.
The housing market report for Alicante province was prepared by a professor of applied economics from Alicante university (UA), Francisco Juárez Tárraga for the provincial association of real estate promoters (Provia).
He concluded that demand will improve during the second half of the year thanks to the 5.8% economic recovery predicted by the IMF, helped by the province’s attractiveness European buyers.
Also, property is seen as a refuge for investors in situations of economic turnmoil, with Alicante being seen as a preferential location along with Madrid, Barcelona and Málaga.
Sr Juárez said the optimism for a relatively speedy recovery is because the health crisis has not, so far, destroyed productive factors. Indeed, some companies currently constructing homes reported having sold or reserved almost two thirds of these homes. Those consulted in Alicante province only reported a cancellation rate of 3.36% since May 31, which is about the usual level.
While 96.2% of businesses to consulted in the real estate sector have not altered their prices, 1.9% have increased theirs by an average of 3%, and 9.4% expect to increase theirs between August and December.
On the other hand, for the second-hand market 75% of them expected significant drops in prices.
For 67.3%, demand for new build homes will remain stable this year, and 51% expect increased interest from foreign buyers in the short and midterm. Non-residents make up 50% of the residential house buying market.
Nevertheless, the uncertainty has caused many companies to delay future projects, which Sr Júarez indicated is a consequence of the economic paralysis reducing people’s ability to pay.
“This causes an increase in rental market prices and reduction of housing prices, although new build prices remain stable,” he said.
Provia president Antonio Fernández claimed the sector is financially strong and solvent, being the only one at a national and provincial level that is constantly generating employment.
The price per square metre
new-builds continued to of grow, by 2.13% in the first quarter, while for second-hand homes it fell by 1.33%. This was put down to socio-political changes, such as Brexit, and global commercial uncertainty.
Rental prices have continued to go up since 2007, despite a slowdown in 2018, due to increased demand for housing and the lack of accessibility to the market for buyers.
In Alicante province they rose by 8.96% in May, despite falling in the rest of the region and nationwide.