The latest statistics from the Housing Department, part of the Ministry of Public Works (Fomento), say the vast majority of foreigners who buy property in Spain are also living here as residents, which anyone in the property business knows is plainly untrue.
Los datos oficiales no enganan – the official statistics don’t mislead- begins an article at Idealista News (a leading Spanish property-portal), analysing the latest Government statistics, based on figures from notaries, according to which just 1pc of foreigners who buy property in Spain are non-resident. But mislead is exactly what the official figures do. Talk to any agent selling Spanish property to foreign buyers and they will tell you that most of their clients are non-resident, to the tune of 80pc in many cases. It looks to me like the Housing Department’s figures are way off target, which is bad news as how are they going to formulate a sensible policy on such an important question as foreigners buying property in Spain (vital to the economy) if they don’t know what’s really going on?
According to the government statistics, just 1,086 non-resident foreigners bought property in Spain in Q2, a far cry from the almost 5,000 who bought in the same period of 2006. Fair enough; I don’t doubt for a second that the number of foreign buyers is down from the peak, but I do doubt the official breakdown between resident and non-resident buyers.
The total number of foreigners buying property in Spain, resident and nonresident combined, has now increased to almost 17pc of the overall market, thanks to 1) an increase in the number of foreign residents buying a home in Spain, and 2) a big decrease in the number of Spaniards buying property in Spain (which increases the relative importance of foreign buyers), as you can see from the following chart:
The Canaries, Balearics and Valencian Region are the areas where foreigners of all stripes have gained market share, and are now much more important than they were in the boom, largely due to the severe decline in purchases by locals. Foreign buyers are now over 30pc of the market in these three regions as illustrated by this chart:
Foreign buyers by nationality
Where do foreign buyers come from? Idealista analysed figures from the property register to produce the following table:
The British are still the biggest group of buyers, but economic migrants from countries like Ecuador and Morocco, who were big buyers in the boom, have now disappeared from the top 10, whilst Russia and China have joined.
You can be confident that buyers from EU countries like the UK, France and Germany, that now dominate the top 10, are predominantly non-residents buying holiday-homes (I assume around 80pc). This year I have spoken to many agents on this question, and almost all agree that 80pc of their European buyers are non-residents taking advantage of the crash to bag a bargain holiday-home.
The figures from the Property Register, which I’ve been told only count non-resident foreigners, also contradict the idea that most foreign buyers are resident, and that only 1,086 non-residents bought Spanish homes in Q2. According to the Property Registrars, there were 13,632 non-resident purchases in Q2, unless I am mistaken.
Also, it stands to reason that most foreign buyers from EU countries are not resident in Spain when they first buy a home here. They may subsequently become resident, but at the time of purchase most will still be living back in the UK or wherever. Residency follows a home purchase, not the other way around.
So why does the Housing Department, which uses figures from the notaries, say the vast majority of foreigners buying property in Spain are already resident here, contradicting the figures from the Property Register and what estate agents report?
This is a question I can’t answer with any certainty, and need to get to the bottom of. However, there are some obvious reasons why the figures might differ:
1) I’m told the registrars only include non-residents in their figures, whilst the notaries include both.
2) The registrars count properties sold, whilst the notaries count buyers. So if a British couple living in Alicante, and classified as resident, buy a home there, the notaries count that as two foreign (resident) buyers, whilst the registrars wouldn’t count them as foreign buyers at all.
Any other ideas as to why the Housing Department’s figures are so off target?