BBVA: Due to Covid, 27,000 Homes Remained Unsold in Valencia

BBVA: Due to Covid, 27,000 Homes Remained Unsold in Valencia

View of Valencia, Spain

The cost of secondary housing in Spain in the third quarter of 2021 grew by 0.4% quarterly and by 2.5% annually, reaching an average price of 1,892 euros/m².

Last year, housing sales fell by 50% across Spain, and in the Valencian Community by 54%.

The impact of the pandemic on the real estate sector generated pent-up demand as a consequence of restrictive measures, which was gradually realized as the situation improved. According to BBVA Research estimates, this pent-up demand amounted to about 125,000 homes across Spain as a whole, of which 27,000 fell on the Valencian Community.

This is one of the conclusions of the Real Estate Situation study, presented by Felix Lores from BBVA Research Real Estate. It notes that last year housing sales in Spain fell by 50%, and in the Valencian Community the decline was 54% due to the absence of tourists and the significant weight of foreign buyers in the regional market.

Demand is confidently recovering against the backdrop of improving economic conditions. BBVA forecasts that the number of transactions in the region will reach pre-pandemic levels as early as this year.

By province, such recovery will occur in both Valencia and Castellón, but not in Alicante province, which has not yet returned to its previous dynamics. According to analysts, the reason lies in Alicante’s strong dependence on foreign buyers, primarily British, whose demand has not yet recovered at the same pace as domestic demand.

On the supply side, the study indicates that the situation in the community is weaker than the Spanish average. From January to July, the number of construction permits in the region decreased by 11.3%, while across Spain as a whole there was growth of 25.5%.

Among current trends, the analyst noted that buyers are seeking more spacious individual homes, as well as properties with terraces. This is a consequence of the pandemic — partly due to the need for open spaces, partly due to the transition to remote work.

In his conclusions, he indicates that recovery is based on pent-up demand and accumulated savings (factors that will exhaust themselves over time), but in the long term it could be supported by the influx of immigrants and the purchase of second homes by foreigners.