British dominate expat market for homes in Spain

It’s no secret that the British are important players in Spain’s property market, but it may come as a shock to see quite how important. Having done some digging with new figures, it turns out that the British completely dominate the expat market for homes in Spain, much more so that many ‘experts’ thought. That has big implications for the market, now that the weak pound and other factors have hit British demand hard.

People in the business always knew that British demand led the expat market, but thanks to a lack of reliable figures, nobody knew exactly by how much. In one of the most comprehensive studies of the expat property market in Spain, British demand was estimated at 34% of the expat market in 2001, falling to around 30% in 2008, on a par with the Germans.

But now, at last, we do have some reliable figures for sales by nationality. Spain’s property register has finally started publishing figures that breakdown property transactions by nationality, and as the following table shows, the British are far and away the biggest buyers. (Numbers have been selected to show the ‘expat’ market, excluding economic migrants)

Property transactions by nationality

Property transactions by nationality

So the British were 58% of the European expat market in 2008, with 11,485 new title deeds registered, down from 63% in 2006.

The next biggest group – the Germans – were just 10% of British demand in 2008, with a paltry 1,534 properties bought.

The Germans, and all other European nationalities combined, only added up to 70% of British demand in 2008. Only Russian demand was rising in 2008, but even that might have been sent packing by the economic crisis.

British demand in 2009 is likely to have fallen dramatically, thanks primarily to the weak pound and the economic crisis, but also thanks to Spain’s bizarre attempts to shoot itself in the foot with a relentless series of property scandals, injustices, and mindless over-development. But even if British demand falls by significantly more than other expat groups, I expect that British will still be the biggest buyers, and that the market won’t recover until they are back in force.

I’ve also dug out some figures from the Ministry of Housing showing the number of properties purchased annually in Spain by non-residents.

Sales to non-residents (source: Min. Vivienda)

Sales to non-residents (source: Min. Vivienda)

As you can see, sales of property to non-residents fell to just 3,691 last year, down 60% on 2007, and 80% on 2006. These figures, if correct, suggest that the expat holiday home market imploded in 2008, to almost insignificant niche levels for some of Spain’s most popular coasts.

Now, there are several good reasons why these figures don’t tell the whole story of British buyers in Spain, but it does give us a good idea of the trend for expat holiday home purchases in Spain, of which the majority bought by British.

What conclusions can we draw from these figures? There are several, but I don’t want to bang on, so I’ll stick to one, which is that the market won’t recover until the British are back. It’s a pipe dream to hope that the Germans, or Scandinavians, or some other group, are going to step in to shore up the market now the British have gone. It just isn’t going to happen.

I have no doubt that, one day, the British will be back in force. When will that be? Certainly not before the pound recovers. It will also help if Spain uses the downturn to clean up its act with town hall corruption and land grab laws, and resists knocking down any more innocent British pensioners’ houses. Let’s hope that’s not asking too much.



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