22,600 of the c. 900,000 Spanish property transactions inscribed in the Spanish property register in 2006 involved British buyers (most recent data available). This shows that the British are the biggest single group of buyers of Spanish property after the Spanish themselves. It also reveals how vital British buyers are to the Spanish property market in popular coastal areas. German buyers, in contrast, are almost irrelevant to the market, being just 10% of British demand. In total, the British represent over 60% of all European demand for holiday homes in Spain. If British demand falls, it puts the market under strain.
Which is exactly what happened in 2007, and helps explain why certain market segments are now in deep trouble.
Property professionals in some areas, like the South Costa Blanca and Murcia, report that British buyer activity fell by 80% in 2007, whilst Marifé Esteso – the president of the Alicante branch of Spain’s real estate agents’ association (API) – is reported to have said that British buyers are 90% down in recent months. She also said that Germans have not been buying on the Costa Blanca for the last 3 years, and that the Germans who still own property there are selling up.
So the fall in British demand appears to have been dramatic in 2007, and looks to be accelerating. Why?
Because British buyers have been turned off by a constant stream of bad news involving corruption scandals, illegal building, demolition threats, land grabs, over- development, dodgy agents, dodgy developers, dodgy lawyers, and countless stories from unhappy owners, buyers, and investors. Furthermore, given building standards and it’s urban planning model, Spain no longer appears to offer value for money, whilst overseas property buyers have a greater choice than ever before of alternative destinations. And lastly, many Britons are now aware that the Spanish property market is facing serious challenges, so even those who still want to buy in Spain may be waiting to see what happens.
I estimate that the number of British buyers fell from 22,600 in 2006 to 10,000 to 15,000 in 2007. I forecast that numbers will fall to between 5,000 and 10,000 in 2008. Back in 2003, at the peak of the boom, there might have been as many as 50,000 British buyers. This is all just guess work, as nobody really knows the true picture.