The Property Finders, a company offering an international property search and acquisition service, has published a report on the Spanish property market in 2017, written by Barbara Wood, a specialist in Southern Spain.
Barbara runs over the main property market stats for last year in her report, which you can read in full at The Property Finders website following the link below. She points out there was plenty of good news last year, but also areas for concern, such as the concentration of foreign demand in a “handful of locations and then only in the most prime spots within those locations.” So the recovery in demand is not being felt in some areas. “The result is that we now have the same number of foreigners buying in Spain as at the pre-crash peak but concentrated in just a few places, and that helps explain why it feels so active in the 5* locations and still so flat in what I call the secondary and peripheral areas.”
Barbara explains that domestic demand is recovering, but from an abyss so deep it’s going to take time for confidence to return, particularly in up-market segments. She gives an example to illustrate this point: “At the end of 2016 I started work for an international buyer wanting a house right in Málaga city and it quickly became clear that Spaniards themselves don’t have much confidence in the domestic market recovering anytime soon. All the vendors I spoke to, with properties for sale at €1m and more, were very sceptical about the likelihood of a Spanish buyer and thought their best chance was a deal with a foreigner.”
On the subject of buyer preferences, she notes a potential backlash against the “shift towards contemporary architecture, lots of glass and flat roofs.” I’ve heard similar comments from estate agents in recent months, so I sense a growing number of house-hunters are left cold by the minimalist trend, and are looking for architecture that is warm and relevant to the local culture. Barbara goes on to say that “every trend has a shelf life and I’m wondering if what was once seen as very futuristic and exclusive is now a bit overdone – at the end of 2016 I worked for clients who specified that they didn’t even want to look at ‘white boxes’, they wanted a house with an exterior that made some reference to a more traditional Spanish architectural style but with totally modern interiors. As the ‘white box’ look is now so ubiquitous at every level of the market I think I can just see the beginnings of move towards a more individualistic approach.”
On Brexit Barbara says that a “lot of nonsense has been written about the effect the result of the EU referendum is having, or will have, on the Spanish property market in 2017.” She seems to suggest the fall in British purchases reflected in the Q3 figures from the Registrars had nothing to do with Brexit. “Some commentators used Q3 Property Registry returns as an indication that British demand had fallen 16% as a direct result of Brexit,” she writes. “However, as I pointed out at the beginning of this report Property Registry statistics don’t tell you anything about that actual quarter, they are a reflection of what has happened previously.” She offers no other reason to explain why British demand might have fallen.
In my opinion the 16% decline in Q3 was a direct result of Brexit. Uncertainty, and a falling pound in the run up to the referendum, caused sales to decline by 16% before the referendum. If there had been no Brexit referendum, there would have been no decline. The data on foreign demand for Spanish property in Q4 is now available, and shows a 28% drop in British demand, which is obviously due to to Brexit.
Barbara goes on to predict that British demand will be the same in or up in 2016. “The total of British buyers in 2016 is the statistic I’m most looking forward to seeing in the first half of 2017. My prediction is that numbers will be similar, maybe a bit down but could even be up, compared with the previous year,”. Courageous forecast, and she was right (up 2%), but only because British purchases registered in Q1 last year were almost 50% up, based on sales that took place in Q4 2015, when the pound was riding high before Brexit worries took hold. If you compared 2016/2015 British purchases in the quarters that count (Q2, Q3 & Q4), then British demand was down a cumulative 18% in that period, and all thanks to Brexit.