Although in general terms the construction sector in Alicante is in a slowdown phase, partly contracting from record figures in recent years, Orihuela is still leading the interest in foreign buyers, responsible for 87 percent of all sales.
The province recorded 3,830 home purchase and sale transactions during the month of March, and according to the “Housing Market in Alicante. A Graphic Analysis” report, by the Association of Real Estate Developers of the Province of Alicante (Provia), purchases by foreigners increase in the province, reaching 87% of transactions in Orihuela.
This increase gains weight due to the contraction of national demand due to the increase in rates, the increase in price and the limitation of supply. The study points out that new housing only represents 12% of total sales.
The report places emphasis on the foreign buyer, not because it registers significant increases in demand, but because of the reduction in the national buyer. Appraisal entity Euroval understands that foreign buyers remain stable, but their proportional weight increases due to the percentage reduction of the Spanish buyer.
Currently, 87% of purchase and sale operations in the Orihuela area are carried out by foreign investors, 40% in the case of Alicante and its metropolitan area and, in Elche, over 20%. The Netherlands, Belgium and the United Kingdom are the countries that send buyers who remain at the top among the nationalities that generate the most activity in the real estate sector in recent years, despite the boom in the arrival of residents from the east and north of Europe.
In the final report of 2023, Orihuela saw nearly three times as many British buyers than neighbouring Torrevieja.
The supply of new housing in the province has only represented 12% of sales for several years, which drives the escalation of prices in sales and its collateral effects of social impact on the rental market. Furthermore, the sale and purchase of used housing is currently contracting after previous periods of growth, especially in the coastal area, except in Benidorm and La VIla Joiosa.
All this has kept prices rising, which have only recently slowed down. In the case of new construction, due to the reduced supply, but also due to the characteristics of the more energy efficient homes, with better qualities, and common spaces, there is an effect of price increase that is due to the fact that the home can be considered of higher quality. Used housing is registering a slowdown in its price more linked to the impact of the rise in interest rates and access to credit for the final buyer, although the report details that the financial aspect has a greater influence on the number of purchase and sale operations than in the final price of the operation.
The report states that the variable that has most influenced the recent evolution of the real estate market in the province has been the response of the Central Bank to inflation by raising interest rates, both for final buyers and for the financing of the real estate developments themselves.
