The latest housing market figures from the Property Registrars based on home sales inscribed in the Registry show that foreign demand for property in Spain grew strongly in the second quarter, with British buyers holding their ground as the dominant group in the lead up to Brexit.
Foreign buyers were involved in 14,429 of the home sales recorded in the Registry in Q2 (based on sales completed in the previous month or two), up 29.1% on the same period last year.
Total sales in Q2 were up 23.7% to 107,838, as purchases involving local buyers increased 22.9% to 93,409.
As a result, the market share of foreign buyers in Q2 was 13.4%, almost a record high (see chart above). So it seems that the appetite of foreign investors for property in Spain just keeps rising.
BREAKDOWN BY NATIONALITY
The British were once again the biggest group by far with 20% of the foreign market, followed by the Germans with 8%, and the French and Swedish with 7% each.
Swedish demand was up the most – by 60% – followed by Italian demand up 46%, and Chinese demand up 31%. Russian demand continues to contract, down 1%, and Norwegian demand fell by 2%. The sum of demand from small markets was up 32% in a good sign of diversification. German demand was up a healthy 25%, and French demand up 12%.
British demand was up 29% year-on-year, which may come as a surprise to those expecting to see a collapse in demand from the UK in the light of Brexit.
However, given that the UK’s referendum on EU membership took place on the 23rd June, these figures do not reflect sales after the referendum. If there has been a big drop in British buyers since the Brexit vote, it probably won’t show up until the Q3 and Q4 figures are released.
That said, I was expecting to see a decline in British demand simply due to the weaker pound in Q1. As it happens British buyers stood their ground despite a weaker pound, and demand from the UK has been fairly steady for four consecutive quarters, as illustrated by the chart below. But given the pound is now closer to €1.15 thane 1.20, how long can this last? I expect to see a noticeable decline in the Q3 figures when they come out.
The Swedish bought more than 1,000 homes in Spain in one quarter, the first time that has even happened, whilst Chinese demand is steadily increasing, perhaps due the the Spanish ‘Golden Visa’ scheme.
The Registrars also report that their house price index, based on a repeat sale methodology (only counting properties sold twice in the study period), rose by an annualised 7.48% in Q2. I’ll cover this in more detail when I do my monthly Spanish house price index roundup at the end of September.
All in all the picture is one of increasing foreign demand for property in Spain, though who knows how large it could be if Spain was better governed.
CORRECTION 7TH SEPTEMBER
I have discovered that the original chart I published for YOY change in demand by nationality was wrong (see chart below). Therefore, the original comments I made about Italian, Russian, French and German demand were also wrong. The version above is now correct.