Analysis of the Spanish property market by Alfredo Millá, head of Sonneil – an estate agency focused on foreign demand – reveals that foreign demand for Spanish property is back to pre-crisis levels for all key markets except the UK, which happens to be the most important market of all. Though still depressed by boom-time standards, there are signs that British demand is recovering, argues Millá.
Though growing again in number, British buyers in Spain are still 76% below their pre-recession levels, as I explained in my presentation on international marketing challenges at the latest Barcelona Meeting Point property fair.
But other than the weakness of British demand, foreign demand for property in Spain is looking better than ever, with foreigners now buying more than they did in the boom years.
Scandinavian countries, in particular, have increased their volume of purchases by 450%, compared to the year 2006, followed by Belgians, 240% and French, 54%, all according to data provided by the Land and Mercantile Registrars Association of Spain’s Statistics Reports (registradores.org).
However, the big market – the UK – has remained in the doldrums for the last few years, though it is now showing signs of recovery after collapsing between 2007 and 2009, as illustrated by the following chart.
British buyers peaked out with 38% share of the foreign market in Spain. Now they are closer to 16 per cent.
Nevertheless, according to our research, there are some reasons for optimism concerning British demand, which is showing signs of recovery. This all-important market is increasing again as a percentage of overall foreign demand, supported by better macro-economic figures after years of crisis.
These are three main grounds for optimism I’d like to point out:
• According to UK’s ONS (Office of National Statistics) the percentage of unemployed people in the UK has fallen from 2.7 million in 2011 to be slightly less than 1.9 million today, close to reaching 1.7 million as in the period from 2006 to 2007.
• The current Exchange Rate is around 1.27, far from the parity achieved in 2008, the collapse date.
• According to ONS UK’s GDP should grow by 2.8% and will approach the pre-recession period. In fact, the growth rate in the first three quarters of 2014 reaches 2.5%. The following chart shows the evolution of British GDP.
In conclusion, the second home market in Spain depends on British demand, which is clearly missing for a full recovery, now that other nationalities are buying in greater numbers than ever. British demand is still a long way from boom levels, but all the signs point towards a recovery around the corner.