Why is Alicante so attractive to invest in housing?December 15 the 2022
Alicante has become one of the most attractive areas of the country for small investors looking for a way to make the most of their savings in brick. The relatively affordable prices that can still be found in many popular neighborhoods mean that the profitability of renting out the property is high, which is why this type of operation has become one of the factors that stimulate the market.
Thus, in the specific case of the city of Alicante, up to 32.3% of the sales that are registered are carried out by investors, which is five points more than the national average, according to the data provided on Monday by the Director of Analysis. of the Tecnocasa Group, Lázaro Cubero, and the person in charge of the chain in the area, José Ángel Morcillo, during the presentation of the study they have carried out on the Alicante real estate market. A situation that, with some nuances, they consider to be extrapolated to the province as a whole.
And it's not just about local savers. "In the Alicante offices we receive requests from delegations in Madrid, Castilla-La Mancha and many other areas that have clients who want to buy flats in Alicante as an investment," Morcillo assured.
The reason is none other than the high profitability that can be obtained. Thus, those responsible for Tecnocasa have given the example of the average home sold by its franchises in the capital of the province, located mainly in popular neighborhoods. A 83-square-meter home for which the buyer pays around 69,000 euros and for which he can currently claim around 500 euros of monthly rent on the market, which is equivalent to a gross annual return of 8.7%.
Figures that far exceed the interest on the public debt or the remuneration offered by current accounts or term deposits, and, of course, it is also more attractive than the Stock Market, if one takes into account that the Ibex 35 has fallen a 13.8% in the last year. Thus, the percentage of investors out of the total number of operations has increased by three points since last year.
With these figures, what is also clear, for those who are considering the dilemma, is that, for the moment, it is still much more attractive to buy than to rent, as long as the necessary resources are available. Thus, a buyer who purchases the same type of home for 69,000 euros, may apply for a mortgage of up to 55,200 euros, for which they will pay a monthly fee of 248 euros, with a rate of 2.5% and a repayment period of 25 years. An amount that barely accounts for half the cost of renting that same home, as explained by Lázaro Cubero.
Of course, the expert has also recalled that financial conditions are changing, with the increases in interest rates approved by the ECB, which have made the granting of fixed mortgages by banks less attractive. Thus, while last year up to 92.6% of the loans intermediated by the real estate franchise were at a fixed rate, so far in 2022 the percentage has fallen to 59.1%. On the contrary, variable interest mortgages represent 31.8% and mixed ones, 9.1%.
On the other hand, Tecnocasa's Director of Analysis has pointed out that the prospects for price recovery have caused customers to overestimate the price they can get for their properties even more than usual when they are put on the market. Thus, on average, owners tend to calculate that they will get 21% more from the sale than the price set by the market.
In this sense, another of the trends observed from the real estate franchise is that the ranges in which the negotiations between buyer and seller are moving are expanding. Specifically, if last year the average discount that was accepted was around 9.2% on the initially marked price, in 2022 the operations are closing with a discount of around 11.1%. Of course, in any case the final price paid is higher, since the square meter of used housing has become more expensive by 4.5%, according to company data.
Regarding the profile of the franchise clients in the city of Alicante, it is a person who buys their first home (66.2%), pays in cash (60%), is between 45 and 54 years old (44.6 %), is of Spanish nationality (61.5%), has an indefinite employment contract (61%) and secondary education (42.2%).
A very dynamic market
On the other hand, Tecnocasa has analyzed the dynamism of the real estate market in the Valencian Community and in the province of Alicante, in relation to the rest of the country. A comparison that makes clear the greater volume of transactions that are registered in the area. Thus, while at the national level there are 2.4 second-hand house sales operations for every hundred existing homes, in the case of the Valencian Community the figure rises to 2.8 and in Alicante it shoots up to 3.12 .
And within the province, the figures for towns such as San Fulgencio stand out, with 4.48 transactions per hundred homes; Altea, with 4.40; Teulada, with 4.27, or Xàbia, with 4.24.
In new construction, the national average is 0.28 sales per 100 homes. The Valencian Community (0.32) is again in this case above the national average. Alicante is, once again, the most dynamic Valencian province, now, in new construction (0.40). Finally, by towns in Alicante, in terms of dynamism in new construction, Pilar de la Horadada (1.10), Orihuela (0.90) and El Campello (0.80) stand out.
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