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Engel & Völkers Licence Partner Valencia > Blog > Radiography of Valencia and the real estate market

Radiography of Valencia and the real estate market

Valencia is the fourth largest economy in Spain. It also holds a position in terms of population with about five million people. Around 10% of Spanish gross domestic product (GDP) is generated in Valencia, although in terms of per capita GDP, 20.073 euros of Valencia lie somewhat below the 22,780 euros of the Spanish average.

In 2015, Valencia has been one of the regions with the highest economic growth thanks to the improvement in the industrial sector, the increase in private consumption and investment and the shift towards a more expansionary fiscal policy. Although forecasts suggest a more moderate increase in 2016, according to estimates by BBVA Research, the smooth progress of both exercises allow the community to create 140,000 jobs, which is generating half the jobs that were previously destroyed during the crisis. 

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This result will be the out come of the productive system inertia and maintenance of external demand as well as the consolidation of employment and domestic demand as expected to occur throughout this year. By sector, it is estimated that this consolidation is given by the production activity in manufacturing and construction.

In this regard it is noteworthy that in the first half of 2015, and for the first time since 2008, an increase in the number of employed people in the construction sector occurred.

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Real estate market 

Valencia is the fifth Spanish community where it costs less to buy a home. At least it appears that way as the actual index prices that are prepared by the Valuation Society defines the number of years it would take a citizen who is on average salary to buy a home. The average for Spain is 7.4 years, Valencia is 6 years compared to 14.2 years in the Balearic Islands.

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However, the difference in the average prices in various districts of the city is huge and while in Ciutat Vella stands at 1,978 euros per square metre, in Rascanya, it is 850 euros. In the same line, Tinsa has experienced price rises of nearly 7.5% in areas such as Campanar and a drop of 9% in other places such as Northern Villages.

There are sharp contrasts in the Valencia property market between the dynamism of demand for resale housing against the fall of the new ones, much more evident than in the whole of Spain. So while the number of transactions recorded in new housing fell 46.4% in Valencia in the first half of 2015-ten per cent more than national average, the purchases of used homes increased by 49.1% compared to 42.9% for entire Spain, as recorded by the Valencia Housing Observatory in its latest report.

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