The decreasing number of new construction homes in Valencia is beginning to seriously impact the city’s property market and influence rising prices.
The New Construction Homes market in Valencia and its metropolitan area is far from improving, and in fact is deteriorating.
In the last three years, prices have increased by 50% (more than 1,000 euros per square metre), while the number of new construction homes has decreased due to a “constant slowdown” in development activity.
The statistics are concerning. According to the Housing Observatory Chair of the Polytechnic University of Valencia (UPV), the number of new construction homes fell by 4% in the first quarter of 2023 compared to the previous quarter, warning of “extremely reduced supply under the pressure of enormous demand” in its latest report.
“We can confirm that the prices of new construction homes in Valencia and the metropolitan area remain stressed, dragging up the prices of second-hand homes and rentals,” says Fernando Cos-Gayón, Chair’s director.”We must act now, because there is still time to address the housing crisis.” “The various administrations must work together to implement policies that enable a sustainable housing stock,” he says.
A look at the prices of new construction homes in multi-family buildings in the city reveals a 17% increase in average unit price when compared to the first quarter of 2022. The increase is 1% in comparison to the fourth quarter of 2022. The rise in prices can also be seen outside of the capital. The greatest increase was in l’Horta Nord (27%), followed by l’Horta Sud (20%) and l’Horta Oest (11%).
The Housing Observatory Chair of the Polytechnic University of Valencia insists that there is a solution, but it involves the combination of various measures. On the one hand, a real public-private collaboration is needed, “since there are many success stories in countries of our geographical and cultural environment that support it.” In addition, they propose addressing the updating of administrative processes that take advantage of technology to reduce license management times.
In terms of buyers, they proposed a financing aid for first-time buyers.A proposal to establish the Administration-backed guarantees that allow the purchase, between 20% and 30% of the final price, has already been voted in the Parliament, but it is only available to certain segments of prospective buyers.
The University also emphasises the “need to implement a comprehensive protected housing plan, with a medium and long-term vision.”
The Chair conducted a study of available land and projected various scenarios in the recent special report on subsidised housing prepared by this body. One of its findings was that by implementing appropriate measures, the average price of new construction homes in Valencia could be reduced by more than 30%.
According to the report, the lack of new construction homes has also impacted rentals, with rising prices being the obvious result. Although the increase in rental prices has been 7% compared to the last quarter of 2022, it stands at a whopping 59% in Valencia and its metropolitan area compared to the average price at the end of 2019, before the pandemic.
The triggering factor was a 61% decrease in the number of available rental homes compared to 2019, which alone was responsible for a 16% increase.
One of the main axes of the electoral campaign for Valencia’s mayor has been the issue of rising housing prices. Joan Ribó, the mayor and Comproms candidate, selected the construction of affordable rental apartments as one of his top priorities for the next term. The opposition leader, the PP candidate, Mara José Catalá, proposes to build 1,032 VPO (protected housing) units in 15 municipal plots and free up the city’s large bags of land.
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