The annual Numbeo macrostudy of international destinations for factors such as cost of living, quality of life and more has just dropped and guess what.. Valencia rocks. Valencia has rocketed into the top five cities in the World for quality of life from number 70 last year and it ranks highly on every metric in the study**. Numbeo takes data from people actually living in the places they study to give an up to date ranking for everything from local salaries to interest rates and even the price of a pint, or litre, of milk. So kudos to The Hague, Eindhoven, Luxembourg and Rotterdam for ranking above Valencia but let me know about the temperature and sunlight there in January (And even in June) then we can talk.
**One thing though, the figures are generally excellent but I am pretty sure there is a huge mistake in the figures for Valencia this year and I'll explain what it is later. And you know, I think it is partially our fault here at Valencia Property!!
What is in the Numbeo Index?
As mentioned above, the Numbeo index is taken in real time from people living in towns and cities all over the World. It includes prices of a basket of goods, pollution figures, climate data, safety issues, healthcare costs and provision, purchasing power of salaries, and property price to income ratios. In smaller towns and cities the results can be skewed by one person's report being out of line with others but as soon as there are a lot of respondents as there tend to be in larger towns and cities then the results become more reliable.
This year in Valencia there were 1546 entries in their database from 217 different contributors. That's a good sample size. You can see all of the figures for prices in Valencia here and I think they are mostly very reliable. I can get bananas cheaper, beef is a bit more expensive etc... but these are minor quibbles. However, as I'll explain later I think there is still a statistical quirk which means the numbers are skewed and I'll tell you why too.
The Quality of Life Index
For me the most important thing is the Quality of Life Index because this takes into account everything rather than just income and costs. Climate, healthcare, wellbeing, safety, commute times and pollution are major issues that affect our day to day wellbeing and happiness and Valencia ranks well on all of them. It needs to because on a pure income basis it ranks below many comparable places. In terms of quality of life for the three main cities in Spain, Valencia ranks highly. Barcelona only beats Valencia on the climate index whereas Madrid beats it on a couple of indices with the most striking being the purchasing power index, important because salaries are higher in Madrid.
Here at Valencia Property we often get asked questions about how Valencia compares so we like to compare Valencia with places where our clients come from. We also compare Valencia to other places in Spain so we get more of a like for like comparison in terms of cost of living but our international comparisons are as follows.
We get a lot of clients from places such as New York, London, Prague and Sydney. We also get lots of clients from comparable places such as Seattle, Los Angeles, Miami, Vancouver, Denver, Vienna (The most similar to Valencia) and Paris but we can't put all of them into a single graph ;-).
Why All of the Above is Wrong
Numbers are easy to study and the more numbers there are the easier things get and usually the more accurate the numbers get as they revert to the mean, giving us a reliable average. The numbers for London for example are more likely to be correct because there are 906 contributors to the stats. In Ulaanbaatar, Mongolia there are just 57 so the numbers will be more affected by outliers. In Valencia the 217 contributors give a reliable number for day to day costs but... there's a problem.
According to the numbers, property prices for purchase have gone down by 33% this year from 3000 euros to 2000 euros per square metre. That is completely and utterly wrong. This means that the affordability criteria, the price to income ratios and more are affected and Valencia as a result gets a higher total score because the weighting for property prices is quite high and affects other things. As we mentioned above, last year Valencia was ranked 70th in the rankings out of 195 cities for quality of life. Therefore we need to ask, what has changed to make it 5th this year?
There are two big movers of course. The first is the pollution index, reflecting well on the semi pedestrianisation of many areas, the reduction in traffic and the reduction in prices on public transport attracting more people to use it.
The second is the property price to income ratio. As I said prices have gone down in the centre to 2125 Euros per square metre in the centre (Apparently) They haven't. This is from 57 reports from people regarding property costs this year but many of those are renting. The rental prices are more or less correct though and reflect the 26% rise in prices in the last year.
Equally, take a look at average salaries reported in Valencia. These are average monthly net salaries after tax. Appaently they went up by 33% last year at the same time that property prices dropped by 33%. Amazing isn't it! Totally unbelievable. It's unbelievable because it's not totally true yet it may be at least partially true. See below for why.
Let's assume that prices are reported by new arrivals, which is normal for these types of reports, and 60-80% of people rent initially then there are only 12-24 who reported prices per square metre on purchasing a property last year.
And here's the secret... a few years ago we wrote about comparisons of prices here in Valencia using Numbeo and it remains one of our most read posts. You can see it here. Since then we have sent that article out regularly and we also tell our clients to put their data when they start living here into the numbeo database (It's anonymous).
We also pride ourselves on finding excellent properties for our clients and last year we did that regularly and here's the rub... our clients tend to buy large properties and large properties have a cheaper price per square metre. And I know for a fact that at least four of our Golden Visa property buyers last year filled in these details. If there were only 12 in total then a minimum of 33% of those reporting were our clients. I also know they got properties that were to modernise and that were huge rahter than already modernised, smaller and more expensive properties and therefore their price per square metre metrics were lower, much lower than the average last year.
Equally, our clients were on a much higher salary or income levels than the net 1515 Euros reported last year. I still think the 33% rise from 217 respondents is huge but it shows the effect of two things. Firstly, more well off people moving into Valencia, of that there is no doubt. Secondly the rise in the minimum wage in Spain which has gone up by around 80% in the last eight years after not moving much for years (Now at 1134 Euros for 2024 compared with 655 Euros in 2016 see the graph below from Statista. The previous eight years had only seen a move of 55 Euros) meaning those reporting at the lower levels are reporting higher amounts.
What Does That Mean?
This reporting of purchase prices has a knock-on effect in various ways. It affects the ratios for affordability of property for everyone reporting their incomes even though there are fewer people purchasing than reporting, maybe 12-24 people reporting purchase prices and 217 reporting their incomes.
As mentioned, the average salary reported in Valencia has gone up considerably in the last few years and that is also because those reporting to Numbeo tend to be higher income recent arrivals who come to Valencia as they can work from anywhere. It affects the percentage of income required to pay a mortgage as another example as the numbers are based on buying a 90m2 apartment at 2125 Euros per square metre at a 2.7% interest rate, we'll get onto that percentage in a moment. In fact it affects all of the following as examples.
The mortgage rate given by people reporting for 2023 was a 2.7% fixed rate with a range from 1.52% (Lucky you whoever that was) up to 4%. That is not correct now of course and I'm pretty sure the 1.52% will have been the start of the year and the 4% the end of the year and rates remain around that latter point now.
Currently we are looking at rates between 3.25% and 4.50% on mortgages being currently approved but the 3.25% is with bonuses applied. This suggests to me that more of those who reported their mortgage rates did so at the start of 2023 before rates rose towards the summer. I suspect fewer people reported their 4% fixed rate towards the end of the year. Obviously if we take this into consideration then the loan afforability index above and the mortgage as a percentage of income stats change massively and each datapoint has an effect on the ranking but mortgage repayments have more of an effect than others because it takes up a larger part of monthly expenditure.
You can see a bigger and interactive version of the image here. The bigger the circle the more effect on the whole ranking and the bigger circles tend to be the higher ticket items such as rent, mortgage costs, and utilities rather than a summer dress from Zara (And yes that is one and it is the smallest circle to the bottom left of the graph) You can surmise from the weighting given to restaurants that we are talking about more affluent international respondents rather than people who have lived in Valencia forever although Valencians do like going out to eat.
If we look at the basket of goods for Valencia in 2023 compared with 2022 then it looks as if prices have actually fallen in this report! I think we can put this down to the bump from the start of the war in Ukraine in 2022 when prices of utilities especially rose considerably over the whole World and a few other contributory factors such as the ongoing supply chain issues from the pandemic and the huge increase in demand post covid for... well, everything. You can see the utility spike in prices for 2022 in the following table. Why a reduction to prices lower than 2018 though? Well the government helped by reducing the VAT applied to electricity, gas and water, thus lowering their prices along with a reduction in VAT on basic necessities such as bread, hygiene products and more.
You can see the historical price data for Valencia here. Everything has gone down in the last year compared with 2022 except for milk, eggs, cigarettes and beef, yet inflation figures for the last two years were as follows in the graph below. Prices were still rising but by a much lower level than in 2022, we are currently around the 3% inflation rate. These are annualised figures so the 10.8% isn't per month for any Argentinians looking in, it's in the previous 12 months not 12 days. You can see the effect here of Supply Chain issues and the Ukraine war on power supply prices clearly.
The official figures come after people's perceptions perhaps and people perceived very high rises last year and reported them to Numbeo but they are seeing lower price rises now or reductions in prices on their weekly basket of goods while the big ticket items may remain high. However, you need to know that eggs and Olive Oil are the big price increases in Spain over the last year, making a knock on effect on tortilla prices in cafes, but new arrivals may not see the Olive Oil price rise because it is now more in line with what they were paying in other countries previously.
Where Should Valencia Be in the Rankings?
And really does this mistake on house prices mean that the figures are meaningless? I honestly don't know where exactly Valencia should be in the rankings because if there are errors in the numbers meaning it should be differently placed then, obviously, the same could or will be true for other places, especially those with fewer respondents. However 70 was definitely too low last year and I think that 5, or at least in the top 10, is about right because Valencia scores so highly on other factors important to well-being such as climate, healthcare, safety, pollution and environment.
Not for nothing was Valencia named European Green Capital for 2024. Neither was it named best place to retire to in the World for no reason. Neither was it named best place to live for expats various times by Internations for no reason. Valencia has it all or rather it is pretty much close to having it all. Honestly if the prices per square metre for buying a property on this year's report were correct then everyone who could would be moving here and we need the weekends off so couldn't handle that!!
Contribute to Numbeo
Wherever you live you can contribute to Numbeo. If you want to put in the details for your city just go to this link and start the process. And if you do after reading this then let us know as it will be interesting to look at the figures next year and see how many of our clients and readers contributed.
Property of the Week
Just shy of that magic Golden Visa number (but you can always buy a garage or two) we find a wonderful opportunity to combine business and pleasure and restore this lovely old mansion to its former glories. Its multi level expanse affords a world of possibilities to combine home and work and your imagination is the limit, think English speaking nursery, Ballet/Dance Centre, Yoga/Pilates/Tai Chi or “Whatever you’re into this month” Studio, or even the good old fashioned AirBnB route, which here for once is actually a very achievable proposition.
A whopping 650 Square Metres (m2) set over 6 floors of varying sizes and bags of potential to create 6/8/10 individual apartments, alternatively, and if you’re into the whole “More the Merrier” approach i believe 24m is the minimum so you could have erm, errrr, hmmmmm, plenty of units, tonnes, loads.
For those of you who might actually like to own and live in something quite unique, this is a beautifully located blank canvas on a peaceful square in the heart of Burjassot, clear views to the Church and Grain Silos that form part of Valencias Cultural Patrimony guarantee light and sunshine all year round, and a perfect location for whatever you choose to do with this magical property.
Get in touch for more details, videos and floor plans.
If You Liked This...
Then you should look at our previous articles about the cost of living in Valencia. Just click on the images to read more. As usual if you have any comments or want to chat with us about anything to do with moving to Valencia then feel free to contact us.