The European Central Bank (ECB) has recently decided to raise interest rates again. That news immediately leads to the same question for many home seekers: Are house prices in Dénia finally going to fall?
It's a logical thought. Higher interest rates make borrowing more expensive, meaning fewer people can buy a home. However, the property market in Dénia and the Costa Blanca North works differently to many other markets in Spain.
In this blog, we explain what the interest rate rise means for house prices in Dénia and what buyers can expect in the coming months.
Why is the ECB raising interest rates?
The ECB uses interest rates as a tool to control inflation. By making borrowing more expensive, demand in the economy decreases and price rises can be curbed.
For homebuyers, this often means higher mortgage payments. As a result, some people are postponing their purchase or can borrow less than before.
At a national level, we are therefore seeing a decrease in the number of property transactions in Spain. But does this automatically mean that prices in Dénia will fall?
Dénia is no average Spanish property market
When the Spanish property market is discussed in the media, it's usually about national figures. However, Dénia constitutes its own market with unique characteristics.
A large proportion of buyers come from abroad, particularly from the Netherlands, Belgium, Germany, France, and Scandinavia. Many of these buyers finance their homes partly with equity or are less dependent on a maximum mortgage.
This means that interest rate hikes often have less impact on demand in Dénia than in regions where mainly local Spanish buyers are active.
The biggest problem remains the limited supply
The main factor behind price development in Dénia is currently not interest rates, but the shortage of available housing.
Particularly in popular areas such as:
- Las Rotas
- Las Marinas
- Montgó
- The centre of Dénia
- La Sella
- El Verger and the surrounding coastal zones
the question remains larger than the supply.
New build sites are scarce, building land is in limited supply, and good quality homes are often sold quickly. As long as this situation persists, there will remain pressure on prices.
What are we currently seeing in the market?
At Dacasas Real Estate, we've noticed that buyers have become more discerning than they were a few years ago.
Whereas homes sometimes sold within days during the peak period, buyers nowadays more often take their time to compare different options.
However, that does not mean the market is stagnating. Well-priced homes in attractive locations continue to attract significant interest.
Especially homes that have:
- Sea view
- A good energy performance
- Modern finish
- Walking distance to amenities
- Rental possibilities
remain in demand with both investors and second-home owners.
Can buyers negotiate better now?
Yes, in many cases.
The extreme pressure that has characterised the market in recent years is easing somewhat. This is creating more opportunities to negotiate on price or terms.
Sellers with a realistic asking price remain successful, while properties that are priced too high tend to stay on the market longer.
For buyers, this means that good preparation and professional guidance are more important than ever.
Do we expect price drops in Dénia?
At the moment, we do not expect significant general price drops in Dénia.
We are seeing a shift from a very fast-growing market to a more balanced market. This means:
- Bid less.
- More choice for buyers.
- More room for negotiation.
- Slower price increases than in previous years.
In some individual cases, properties may be sold below the original asking price, but a broad price drop is not currently occurring.
What does this mean for people wanting to buy a home?
For those who have long dreamed of a home in Dénia, the current market could actually offer opportunities.
Competition among buyers is less intense than a few years ago, while choice has increased in many segments. At the same time, attractive homes in prime locations remain scarce.
Waiting for a big price drop can therefore mean missing out on interesting opportunities, especially when it comes to properties in unique locations.
Conclusion
The ECB's recent interest rate hike is impacting the Spanish property market, but the situation in Dénia is different from the national picture.
Thanks to strong international demand, the appeal of the North Costa Blanca, and limited housing supply, we do not expect significant price drops. However, we are seeing a market that is becoming calmer and more balanced, which presents opportunities for well-prepared buyers.
Are you curious what the current market situation means for your plans to buy a property in Dénia or the North Costa Blanca? Please feel free to contact Dacasas Real Estate. We are happy to help you with an honest and up-to-date picture of the market and guide you through the entire purchasing process.
