Mark Stücklin
Foreign demand is easing on the South Costa Blanca — yet mortgage lending is booming. That slightly odd combination is one of the standout signals from our recently published South Costa Blanca housing market report.
At first glance, the headline numbers suggest a market catching its breath. Sales in the South Costa Blanca slipped by 2% year-on-year in the first half of 2025, while foreign buyer activity fell more noticeably. Expat buyers living in Spain were down 3%, and foreign non-residents buying second homes or investments dropped by 5%. As a result, the foreign share of the market fell from 52% to 49%.
That may not sound dramatic, but in a region where foreign buyers have been the dominant force for years, a three-point fall in market share is a meaningful shift. It suggests overseas demand is no longer providing the same momentum it did during the post-pandemic boom — at least for now.
Yet here’s the twist.
While foreign demand cooled, mortgage activity surged. New mortgage lending in Alicante province jumped by a striking 37% year-on-year in the first half of 2025. That is not the behaviour of a market heading into trouble. Quite the opposite: it points to domestic and resident demand stepping in, helped by a sharp fall in borrowing costs as Euribor dropped from last year’s highs.
In other words, the South Costa Blanca market is not simply slowing down — it is changing gear.
Prices add another layer of complexity. Despite softer sales and foreign demand, average transaction prices continued to rise, up nearly 5% year-on-year across Alicante province. In popular resort markets like Torrevieja, asking prices are still rising at double-digit rates, underlining just how tight supply remains in the most desirable locations.
Put these pieces together and a more nuanced picture emerges: fewer foreign buyers at the margin, more mortgage-backed demand, resilient prices, and developers trying — not always successfully — to respond with more supply.
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