I’m involved in an initiative to help make the Spanish second-home market more transparent through better business intelligence. It’s a step in the right direction.
One of the weaknesses of the Spanish housing market is the lack of data on foreign demand, which represents more than 13% of the market. When it comes to selling homes in Spain to foreign buyers, market research and sales data are hard to come by, so the industry is flying blind.
For example, if you follow the market closely, you may have noticed that every quarter the Government publishes official statistics claiming the vast majority of foreigners buying property in Spain are also resident here, when in reality the opposite is true – most foreigners buying property here an non-residents buying second homes. The Spanish press faithfully reports this fiction without question.
Confusing data is bad for the market. At a basic level it puts off buyers and investors, and makes it riskier to get involved in the sector (unless you have a strategy to take advantage of the lack of transparency). Good market intelligence, on the other hand, reduces uncertainty, makes the market more efficient, and benefits everyone, including foreign buyers, who are offered homes and services better suited to their needs.
The lack of market intelligence also played a role in the mistakes of the boom. With no real idea of the true scale of the market, developers wildly over-estimate foreign demand and build too much on the coast. As a consequence, the beautiful Spanish coast was overdeveloped in many areas.
TIME TO GET SMART
The Spanish Land and Business Registrars Association has data on foreign demand, it just isn’t readily accessible. Their data needs to be analysed with expertise and turned into market reports to make it useful. Which is why the Second-Home & Resort Industry Observatory (SHARIO), of which I am a director of, has signed a collaboration agreement with the Registrars Association to add value to their data and make it more useful to the industry.
Under the agreement, the Registrars Association will provide SHARIO with quarterly figures on home sales to foreign buyers for expert analysis in market reports for the second-home & resort industry in Spain. At the very least we will be making better use of data that already exists, and the industry will have a better idea of the scope of foreign demand.
Foreign buyers invest billions of euro in Spanish property each year, supporting an industry that provides hundreds of thousands of jobs, and has a big impact of Spain’s image abroad. According to a recent study by the Provia developers’ association in Alicante province, the industry supports 200,000 jobs in the Valencian region alone. With 20% unemployment, Spain needs all the jobs it can get.
Foreign demand for property in Spain reached a record of 13.18% of the Spanish housing market in 2015, with close to 46,000 sales, according to data from the Registrars. Growing foreign demand between 2010 and 2014 helped to mitigate the Spanish real estate crisis, and foreign buyers have played a key role in Spain’s recent housing market recovery.
To my mind it’s obvious that an industry so big and important to Spain needs better market information to avoid repeating past mistakes like overestimating demand and building too much. Good market analysis helps reduce risks, improve investment decisions, and increase the confidence of buyers and investors in Spain.
Speaking for the Registrars Association, Beatriz Corredor, Director of Institutional Relations says that “the information that the Registrars Association will provide, as a partner of the Observatory, will help to improve both an understanding of the Spanish housing market, and the legal securities that surround the purchase of a home in our country.”
Published at Shario.org, the reports we produce will be aimed at professionals in the industry, giving them a better picture of the reality of foreign demand. But I will also publish some of the information here, to give everyone with an interest in Spanish property a better idea of what is going on in the market for second homes in Spain.