The Spanish Association of Land Registrars recently published a market report for the last quarter of 2016, which I have used to dig out figures on foreign demand for the whole year. The big story is the slump in British demand due to Brexit.

As I wrote last week, the overall Spanish housing market was up 14% last year, with home purchases by foreign buyers up 16%, all based on sales inscribed in the Land Register (so not actual sales completed during the year).

This week, as promised, I’ll take a closer look at the composition and change in foreign demand in both Q4 and the whole year.

Note the figures for purchases by nationality are not exact as they are based on samples done by the registrars. They are pretty accurate though, and certainly good enough for understanding what is going on.

FOREIGN DEMAND IN THE FOURTH QUARTER (Q4)

Sales registered to foreign buyers in Q4 were up 5.1% to 12,678 home purchases, with the British still the biggest group (2,074 sales registered in the quarter), followed by Germany and France. So even after Brexit, the UK was still the largest market by a wide margin.

By market share (percentage of foreign buyers), the UK was on 16% (down from 24% in Q4 2015), followed by Germany and France on 9%.

How did the volume of demand change by nationality? It rose in most cases, led by buyers from the Netherlands increasing by 58%, and even Russian demand posted a small gain for the first time in years. But in the case of the biggest market of all – the UK – it plunged by 28% in Q4 compared to the same period a year before.

The fall in UK demand was largely driven by the decline in the pound brought on by Brexit, as illustrated by the next chart.

FOREIGN DEMAND IN 2016

For the full year, sales registered to foreign buyers were up 15% to around 53,500, with the British still way out in front with 10,156 purchases, partly due to a strong Q1 reflecting sales at the end of 2015.

Over the year demand increased in most key markets, with the exception of Norway, Russia, and Denmark. The UK was up 2% for the year, 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.

Overall, 2016 was a good year for the market, with foreign demand increasing overall, but Brexit was the big story, the full effects of which are not yet showing up in the data. I think we will see a steeper decline in British demand in the figures for Q1 when they come out (between 40% and 50% down, maybe even more), which I suspect will lead to an overall decline in foreign purchases inscribed in the Land Register in 2017.