The number of Spanish homes acquired by foreign buyers increased in the second half of last year at the slowest rate since the second half of 2010, and growth would have been even lower had the the British not continued their love affair with property in Spain.
Foreign buyers acquired 50,249 homes in Spain in the last six months of 2018, up 1.4% compared to the same period a year before, reveals a report just published by Spain’s General Council of Notaries, a trade body. Notaries witness the vast majority of property sales that take place in Spain, and according to their figures, foreign buyers made up 18.2% of the market, down from a high of 20.3% in the second half of 2015.
Although the number of sales involving a foreign buyer increased in the period, the notaries point out that, “in comparison to the previous year, the increases registered in the two halves of 2018 were a long way from the results of 2017, when growth was above 10%.” Foreign demand looks like it might be running out of momentum.
The notaries break down the figures into resident and non-resident purchases by foreigners, showing that non-residents purchased 22,111 second homes in Spain between August and December last year, compared to 28,138 purchases by foreigners living in Spain. So non-residents accounted for 44% of foreign demand, and expats living in Spain 56%.
Non-resident demand fell by 4.9% in the period, after a decline of 0.7% in the first half of the year, whilst expat demand rose by 6.9%, down from 11.3% in the first half. The notaries point out that both segments are now retreating from the high levels of growth common in recent years. Referring to expat demand the notraries say “It appears that the trend towards growth in the purchases of real estate by foreign residents, which had been growing by more than 10% every semester since 2014, has been interrupted.”
The left hand chart above (blue) illustrates how foreign demand for Spanish property has changed since the base period of the first half of 2007, whilst comparing it to local demand. In the first two years both local and foreign demand collapsed by around 60%, but then foreign demand started to recover, whilst local demand (bright blue) continued in the doldrums until the start of 2014, and is still 40% below its peak after four years of recovery. Non-resident foreign demand – primarily Western Europeans buying holiday homes (dashed line) – recovered by 2012 and is now around 70% higher than it was at the height of the boom, whilst expat demand – primarily economic migrants but also some Western Europeans moving to Spain (solid blue line) – recovered by 2015 and ended last year 40% higher than 2007. In both cases you can see how demand showed signs of turning down in 2018, though the same could also be said of local demand.
The chart on the right (yellow) shows how spending by locals and foreigners (non-resident and expat) has changed over the same period. Local budgets (red line) declined until the end of 2014, and have barely recovered since, with the amount spent on property in terms of €/m2 still around 35% lower than it was in 2007, whilst non-resident foreign spending has recovered to 95% of what it was, and expat spending is around 85% of what it was. If you need to sell a property in Spain you better hope it will interest a foreign buyer.
Next week I’ll look at the breakdown by nationality of foreign buyers and where they buy. As I will discuss in more detail, the British are still by far the biggest group of foreign buyers and their numbers just keep growing having recovered after the initial shock of the Brexit referendum. With buyers from most other western European countries starting to lose their appetite for Spanish property, maybe it’s Brexit that keeps driving the Brits to Spain.