Buying property in Valencia for the first time? Here’s what you need to know

Valencia is gaining more and more popularity. One of the city's most compelling propositions for investors is its affordability and high-yield potential.

The cost of living in Valencia is more affordable than in Madrid or Barcelona, and this affordability extends to property prices. It's no wonder Valencia is becoming one of the Spanish areas with the highest demand among real estate investors.

Ready to learn more? This guide covers what you need to know about buying a property in Valencia as a foreigner.

What's the property market in Valencia?

As of September 2024, the average price for residential properties in Valencia was €2,477 per square meter, marking a 16.73% rise from September 2023's €2,122 per square meter.

To put this in perspective, instead of buying a single apartment in Paris, you can afford up to 5 properties in Valencia. The price per square meter for an apartment outside the city center is 81% higher in Paris.

Also, housing prices in Valencia are 21% cheaper than in Malaga. Compared to Barcelona, Valencia's prices are up to 52% cheaper.

Is Valencia a good real estate investment?

Valencia seems to tick all the boxes when it comes to the favorable cost of living and property prices. In addition to its warm climate and port access, Valencia offers enough reasons for investors looking to capitalize on the Spanish real estate market.

Erwin Hartgring, founder of Dream Properties Valencia, explains the appeal, "Ruzafa and Cabanyal are popular neighborhoods that are growing even faster. By buying a house in Valencia, you are assured it is a good investment. You can enjoy it fully yourself or rent it out, and in the meantime, your house should automatically increase in value."

What is the average cost of living in Valencia?

Valencia's prices are generally more affordable than those of other European cities like Paris, London, or Amsterdam. Consumer prices, including rent, are lower in Valencia.

You would need around €3,850 in Valencia to maintain the same standard of life that you can have with £6,800 in London (assuming you rent in both cities).

You might find the chart below helpful, as it compares some basic costs in EUR across the mentioned cities.

Best place to buy property in Valencia

There are 19 districts in Valencia to choose from—some are more expensive than others, some closer to the seaside.

The old town, for instance, is great for those seeking convenient transport, job options, and a vibrant expat community (according to City Council, more than 133,000 of Valencia's residents are expats or foreign-born).

Eixample: one of Valencia's most upscale neighborhoods

Average price per m²: €4,000

Properties in Eixample are among the most expensive in the city, attracting affluent residents, including professionals and expats.

The area offers modern amenities and a historical charm.

Ciutat Vella: the historic heart of Valencia

Average price per m²: €3,500

Situated in a central location, Ciutat Vella is a popular area that attracts both long-term locals and newcomers. Due to its popularity, you might find the tourist crowds and noise levels less appealing.

Ruzafa: more budget-friendly options

Average price per m²: €2,800

Ruzafa is considered Valencia's hipster neighborhood, attracting artists, young professionals, and international residents.

Initially, property prices in Ruzafa were lower, but they have been rising steadily due to the neighborhood's vibrant nightlife, diverse community, and artistic vibe.

Options for cheap property to buy in Valencia

If you're looking for cheap properties in Valencia, there are several options you might consider. These areas are less touristy and offer a mix of modern apartments, townhouses, and fishermen's houses.

Cabanyal: beachside location

Average price per m²: €2,100

Even though El Cabanyal might have had a bad reputation in the past, the area has undergone significant gentrification in recent years. Most houses in this area are renovated old fishermen's huts, giving it a unique charm.

El Cabanyal has become a housing hotspot for expats of all age groups, especially those who have embraced the digital nomad lifestyle.

Benimaclet: high potential for growth

Average price per m²: €2,100

Benimaclet is another area in Valencia where you can find a mix of apartments and townhouses at affordable prices.

Although it's a bit farther from the city center, ongoing urban developments, and improved transport links are expected to boost property values in the area.

What are the costs of investing in a property in Valencia?

As in Spain, taxes in Valencia are closely linked to the district and the type of property you buy. You'll have to pay different taxes depending on whether the property is new or a resale.

Let's say you have found a 64 m² second-hand apartment in Patraix valued at €285,000.

An estimate of the additional taxes you must pay includes:

• Property Transfer Tax (ITP): €32,775
• Notary: €450
• Property registration: €855
• Gestoria: €350
• Property appraisal: €400

The final price you'll need to pay for the property would be €319,830.

If the property is brand new, the total would be different, amounting to €34,830 in taxes.

The main differences are the Value Added Tax (IVA) and the Stamp Duty (AJD). Typically, you'll need to pay a 10% IVA for new homes on the peninsula.

The Stamp Duty varies by region and usually ranges from 0.5% to 2%.

How easy is it for a foreigner to buy a property in Valencia?

There are no restrictions on buying property in Valencia as a foreigner, but be mindful that as a non-resident, the process might become challenging, especially if you are not familiar with the local regulations and language.

Working with someone who knows the local market can make the process more straightforward.

Can you maximize your investment potential with a mortgage?

Obtaining a mortgage can contribute to increased long-term wealth and offers the possibility of tax deductions on interest payments. 

It could be a great investment opportunity, and luckily, many Spanish lenders provide financing solutions for non-resident investors.

What are your mortgage options for buying property in Valencia?

Sabadell, UCI, Bankinter, Cajasur, and Unicaja are among the top Spanish banks ready to offer financing to international buyers with a good financial profile.

What does this mean?

• ability to finance 30% of the property purchase with a deposit
• budget for an additional 8% to 10% of the property price to cover taxes and fees
• the monthly mortgage payment must not exceed 40% of your disposable income
• proof of at least 3 months of continuous employment at your current job

Learn more about the best Spanish mortgages for non-residents, understand their pros and cons, and discover how to select the option that suits your needs.

How Homevest can help you secure the best deal for your property in Valencia?

When embarking on the property buying process, having the right support can make a huge difference.

It's like having someone guide you while you focus on other important aspects of your life.

Homevest is a digital platform that helps non-residents access the best mortgage deals in Spain. The platform centralizes the customer's cross-border house-buying journey into one place, allowing them to easily track their progress.

Just two days after applying through Homevest, Stefan and Vivien, a German couple, received their first offer from Sabadell. After brief negotiations, the client obtained a 3% fixed interest rate for the first year, transitioning to Euribor + 0.95% thereafter, without an additional opening commission.

"We secured favorable terms at Sabadell, even the notary pointed out that the loan conditions are good. Homevest made all the difference in our Spanish property-buying journey", says Stefan.

By having connections with the most important Spanish lenders, you'll have the ability to request and compare multiple offers to choose the one that best suits your profile.

Key things to consider when planning to let property in Spain as a foreigner

Renting out your property will provide a steady income, given that Valencia attracts many tourists and expats, creating high demand for apartments.

If you plan to turn it into an Airbnb, be aware that obtaining a tourist rental license in Valencia is currently not possible.

The city has suspended new licenses for tourist accommodation for one year. 

The good news is that you can still rent your property for long-term periods, but keep in mind that:

• you'll have ongoing expenses
• the rental regulations changed last year - as a property owner, you must now pay all real estate agency fees. Tenants are no longer required to pay any part of the agency fee
• you need to pay 19% taxes on your income rental (24% if you're outside the EU) - the income from rent must be declared and paid quarterly

After reading this guide, you should have a better understanding of buying property in Valencia, the current property market, your options, and how to optimize your progress.

Remember, it's important to compare all available options, whether it's property prices, areas to invest in, or mortgage choices.

Sources used and checked on 4 October 2024:

1. Property prices in Paris vs. Valencia
2. Property prices in Malaga vs Valencia
3. Property prices in Barcelona vs Valencia
4. Cost of living in London vs Valencia
5. Best areas to buy and invest in Valencia
6. Sale cost calculator
7. Valencia will provisionally suspend tourist apartment licenses and limit mega cruisers
8. Taxes on rental income in Spain
9. New regulations on Spanish Housing law

We recommend obtaining professional or specialist advice before taking or refraining from any action based on the content in this article. The information in this article does not constitute legal, tax, or other professional advice from Homevest Limited. Prior results do not guarantee a similar outcome. We make no representations, warranties, or guarantees, whether express or implied, that the content in this article is accurate, complete, or up to date.