From the perspective of the overseas property market in Spain I find the most interesting statistics are from the College of Notaries, breaking down purchases by nationality and region. The most reliable statistics about the Spanish property market are those produced by the Notaries. They are the most accurate because they record when a purchase was actually completed, that is the day everyone sat in front of the notary and money and keys changed hands. So, when you see a monthly, quarterly or annual figure you know it refers to what really happened in that timeframe.
In contrast, the Property Registry statistics count the properties registered in a particular month, quarter or year without stating when the purchase occurred. Properties registered in a January will, for the most part, be purchases completed in December or even November of the previous year. That’s why, when the Notaries announced the returns for the first half of 2018, their total of 285,822 purchases in the period was much higher than the 236,524 counted in the Property Registries during the same months, a discrepancy of around 19%. Some of those deals will have occurred towards the end of 2017 while some purchases done in May & June 2018 won’t be registered until July 2018 or even later.
The Notaries’ returns have just been released and show a total of 53,359 overseas buyers between Jan 1st and June 30th 2018, an increase of 5.6% compared with the same period in 2017 and representing 18.7% market share. This means that at the halfway point in 2018, last year’s all time record of 100,116 foreign buyers is on target to be bettered. Just how important international buyers are for the recovery of the property market in Spain is underlined by that fact that this sector is already more than 20% larger than it was at the pre-crash peak in 2006 while the Spanish domestic sector is approximately 50% smaller.
The variation between the autonomous regions is striking. Way out in front is the Comunidad Valencia with 15,613 foreign buyers, up 16.7%. Andalucía is in 2nd place up 8.2% with 9,737. In contrast, regions not located in the Mediterranean hotspots don’t fare so well: Cantabria welcomed just 145 buyers from overseas in this period while Extremadura was the lowest with 144.
However, two leading Mediterranean destinations registered fewer overseas buyers than during the same period in 2017: Cataluña’s total of 7,570 foreign buyers was down 5.3% while the Balearics suffered an 11.2% decrease with 3,173 overseas purchasers. I think Cataluña’s political turmoil following the Independence referendum in October 2017 is the most likely reason for the lower number plus, given the importance Barcelona, the much tighter control of the tourist rental market is likely to be deterring buy-to-let investors and occasional renters. I discussed these restrictions in an earlier post here: Holiday Rental Clampdown Part II – how Barcelona, Valencia and Málaga are reacting to unprecedented demand for city centre rentals
The decline in the Balearics is a bit more puzzling. One reason might be high prices; in the first half of 2018 overseas buyers in the Balearics paid an average €2,790 per square metre, more than double the price paid in the Comunidad Valenciana (€1,304 pm2) and 65% more than in Andalucía (€1,655), the two regions with the highest number of overseas buyers so far this year. And, of course, Mallorca is the main market of the Balearics and much tougher short term rental restrictions are now in place there, a possible deterrent for buyers who hoped for rental income to cover running costs.
These notarial returns also tell us who heads up the nationality league table. As ever, it’s the Brits. In spite of Brexit turmoil and an exchange rate between 1.12 and 1.13 in the January to June period the British market seems to be holding up extremely well. Compared with the first half of 2017 British buyers increased by 8.8% to 7,613, well ahead of the French who were in 2nd place with 4,211 and 3rd place Germans on 4,138. And the British represented 14.8% of all foreign buyers. In some regions the British market share was even higher; 28% of overseas buyers in Andalucía were British, 23% in the Comunidad Valenciana and an astonishing 57% in Murcia.
Looking back over statistics for recent years second half-year purchases by international buyers are broadly in line with the first half so doubling up on the first half totals is a good guide to the full year results. Given what we know from these latest notarial returns I predict that when we get the full-year results in May 2019, international buyer numbers will be at another all-time high and that the British, who by then will be officially out of the E.U. and in the transition period, will still head the nationality league table by some margin.
