In recent years, property prices on the southern coast of Spain have been rising. Many people observing the market from a distance begin to ask the question: 

could this be a real estate bubble?

It is a natural question. However, in regions such as Costa Blanca and Costa Cálida, market mechanisms work very differently than in many other European countries.

The increase in prices is not the result of temporary panic or speculation. It is driven by very specific factors that have kept demand for property in this region strong for many years.

A place people visit all year round

Costa Blanca and Costa Cálida are among the most popular tourist regions in Europe. Every year millions of visitors arrive from around the world — from the United Kingdom, Germany, Scandinavia, Belgium and Poland.

This is not a market dependent only on local residents. It is an international market.

In practice, this means that demand for property comes from many countries at the same time. Even if the economic situation worsens in one country, buyers from other parts of Europe remain active.

As a result, the market is significantly more stable.

Comparison: short-term pressure vs long-term demand

A good example of this difference can be seen in Poland after the outbreak of the war in Ukraine.

At that time many people started buying apartments under pressure and uncertainty. There was a belief that prices would continue to rise indefinitely, so purchase decisions were often made very quickly.

When the situation began to stabilize, part of this demand disappeared and prices in many places stopped rising or even slightly declined.

On Costa Blanca the mechanism is very different.

Here, most buyers are looking for a place to live, a second home, or a holiday investment. Decisions are usually made more calmly and often after a longer period of consideration.

Development of infrastructure and new investments

Another important factor is the development of the region.

Costa Blanca and Costa Cálida are expanding rapidly. New residential developments, roads, shopping centres, marinas, golf courses and tourist infrastructure are constantly being built.

Airports are also expanding and offering an increasing number of international connections. For many buyers, being able to reach their second home within a two-to-three-hour flight is extremely important.

In practice, this means that the region continues to attract new residents and investors.

Limited number of plots near the sea

Unlike many cities in Europe where new districts can be built almost indefinitely, coastal land is limited.

The most attractive locations — especially those close to the sea — are becoming increasingly scarce.

Naturally, this affects property prices. In such locations, values often increase simply because fewer new projects can be developed.

A market that has been developing for decades

It is also worth remembering that Costa Blanca is one of the most developed holiday property markets in Europe. Foreign buyers have been purchasing property here for several decades.

British, Scandinavian and German buyers have been investing in this region for years. Polish buyers are a relatively new group that has appeared on the market only in recent years.

This shows that it is not a temporary trend.

Security of property purchases

One of the reasons why the Spanish real estate market remains stable is the high level of transaction security — especially for new developments.

When purchasing a new-build property, all payments made by buyers are protected by a bank guarantee known as aval bancario. This means that every payment made to the developer must be secured by a bank.

If the project is not completed for any reason, the buyer has the right to recover their money together with interest.

Additionally, buyers’ funds are deposited into special bank accounts dedicated exclusively to the construction of the project. The bank supervises the use of these funds and the developer can only access them according to the progress of construction works.

Thanks to these mechanisms, purchasing property in Spain is one of the most regulated and secure processes in the European real estate market.

Why people talk about a “bubble”

The term “bubble” often appears when prices rise faster than before. For people who have only recently started observing the market, this may look like a sudden surge.

In reality, however, prices in this region were relatively low for many years compared with other European areas that have a similar climate and tourist popularity.

Part of the current growth is therefore simply catching up.

The most important question is not: is it a bubble?

A much more important question is something else.

Is the property located in a good area, is it well designed and does it match real demand in the market?

Because even in a stable market you can buy an average property… or one that will increase in value over time.

That is why good market knowledge and support from an experienced real estate agency are so important when buying property.

Contact Costa Ibérica Nieruchomości 
C. Ramón Gallud 78, bajo B
03181 Torrevieja, Alicante

+34 644 708 520
+34 865 648 065

office@costaiberica.com