This is a website for buyers, owners, and sellers of property in Spain, offering reliable information and resources to help you get things done with confidence. It is run by Mark Stücklin, author of the Spanish Property Doctor Column in The Sunday Times (2005-2008), and the book ‘Need to Know: Buying Property in Spain’ published by Collins.
A sizeable chunk of British demand for property in Spain comes from expats who have relocated to Spain, so I’ve been looking at the change in the officially resident expat population in recent years. I’ve also taken a look at expat communities from other countries that tend to move in the same market segments as the British.
A growing expat population is good news for Spain and the local property market. Expats increase Spanish GDP, pay taxes, employ people, and buy houses. They also reduce the national debt and budget deficit in per capita terms.
But not all expats have the same impact on the property market. Economic migrants like Moroccans, Chinese, and Pakistanis, to name a few of the biggest groups, tend to rent or buy in urban areas where homes are relatively cheap. Many are working age with young families.
Lifestyle migrants predominantly from northern European countries like the UK, Germany, The Netherlands, and France, tend to buy more than economic migrants, and focus on coastal resort areas with much larger budgets. Many are retired empty-nesters. They provide the bulk of expat demand for homes in Spain’s best known resort towns and areas like the Costa del Sol, Costa Blanca, and the Balearic and Canary islands.
As you can see from the chart above (blue line), the overall foreign population in Spain has been growing in the last two years since bottoming out in 2017 at 4.6m, but is still down 13% since 2011, when it reached 5.6m. That big decline hasn’t helped Spain’s public finances.
The number of EU expats in Spain (orange bars) tells a similar story, though growth in the last two years has been more subdued than the overall picture. The number of EU expats is now 25% lower than it was in 2011, which implies less demand for Spanish property in coastal areas.
Northern European Expats in Spain
Northern European and USA expat communities all tend to move in broadly the same housing market segments, in contrast to economic migrants. With the exception of the USA ,which has been growing steadily since 2007, all show a similar curve down from a peak around the years 2011 – 2013, bottoming out in 2017, and growing softly in the last two years. It helps to look the biggest four expat communities on a different chart (first chart) from the others (second), which would otherwise be dwarfed. The British decline between 2012 and 2017 is by far the most pronounced, and had little to do with Brexit.
British Expat Population in Spain
The British expat population is by far the biggest national group of lifestyle migrants in Spain, and has fallen from a high of just under 400,000 in 2012 to 250,000 today, a decline of around 37%. That said, the number of British expats officially resident in Spain at the start of each year rose gently in both 2018 (+1%) and 2019 (+3%).
Almost 50% of British expats live in the two provinces of Alicante (Costa Blanca) and Málaga (Costa del Sol). The provincial breakdown is not available for 2019 but the numbers for 2018 show the Alicante-based community starting to grow again, as it did in Almeria, Cádiz, Madrid, Murcia, Las Palmas, Sevilla, and Valencia, though not in Malaga.
What factors help explain the decline in expat numbers in Spain?
I seem to remember there was an effort a few years ago to clean up the municipal register as some Government spending is based on it. That might have reduced the officially resident expat population for all nationalities, though I don’t know how much. And there are, of course, a lot of expats who might be considered resident in Spain but who choose to stay off the radar for tax reasons.
Given that the big decline in European expat communities took place between 2012 and 2014, I assume that one of the factors driving the decline was the introduction of onerous Modelo 720 worldwide asset declaration form in 2012. Many people have told me this is one of the main reasons why they have decided not to live in Spain, so I assume this factor is reflected in these numbers. The Modelo 720 declaration, which looks suspiciously like a cynical ploy by the Spanish tax authorities to grab wealth from expats, is a mind-bogglingly stupid obligation that leaves the country worse off. Spain would attract more expats and tax revenues without it.
It seems that Brexit has had little noticeable impact on the number of British expats in Spain, which declined most years before the referendum in 2016, bottomed out in 2017, and started growing again in 2018 and 2019. You could argue that Brexit has modestly increased the British community in Spain since 2017, and with it the number of potential home buyers. Figures from the Association of Land Registrars of Spain also show a slight increase in Spanish home acquisitions by British buyers in 2018 (chart below). Perhaps that’s partly driven by Brits looking for home in a European sanctuary after Brexit.
Chris Nation says:
A factor which will hold back anything other than the low single figure increases of the last two years is the FX rate. The €-zone as a whole will feel this effect.
The advent of BoJo has not been met with much enthusiasm by the FX sector. In fact, the growing likelihood of BJ becoming PM has been reflected by a fall from GBP1=1.1758€ on about 1st May to <1.12€ in the past week. This must give pause for thought to prospective buyers.
I hoped I might nip in quick to get decent odds on a UK GE this year, which I decided is inevitable. No chance: the bookies have already posted odds of 8/11 on this occuring.
Sterling is not going anywhere near the sunlit uplands of 1.40€ [late 2014 to late 2015] or the balmy foothills of 1.30€ [pre 23/06/2016]. I can't see but it will drag its rear end around where we are now or lower for many moons yet.
I have just received a wazzapp from a pal who writes "I've got a horrible feeling this will go on to the end". He wasn't being specific but wherever you stick a pin in the UK politico-economic map, he's right.
And what will 'the end' look like?
Mark Stücklin says:
What will the end look like? Crashing out of the EU and into the hands of the British hard-left is not unlikely. On holiday I’m reading The Gulag Archipelago by Solzhenitsyn. Everyone should read it to understand where you end up with the hard left. Corbyn’s puppet master and communist toff Seamus Milne is a Stalin apologist, and these people are seriously close to taking power in the UK. The country has gone crazy.
Chris M says:
This was fascinating and as ever, thanks for bringing us the data. Just so that I have things right however, firstly; will I be right in saying that the 250,000 UK expats is a figure for those who are ‘officially’ resident in Spain, and as I think you indicate, there may well be those who for whatever reason are – non resident? And secondly; the chart UK market for Spanish sales, is that simply to UK nationals irrespective of whether they became resident or not? I think it likely is, just want to be sure.
And well to comment on that, we all know that real estate has always been a roller coaster market / industry, and in terms of Spanish UK property buyers it probably beats all markets in its ‘roller coaster’ status, but having said that, you have to love the Brits for their passion for Spain, you would just wish that the Spanish government would cut them some slack, look to attract them back and yes not be so mind bogglingly stupid in their view of how best to see revenues created. Thanks again Mark, you are tops and the only reliable source of quality information and data.
Mark Stücklin says:
Chris, thanks for your kinds words. Yes, the official number of residents do not include many people who qualify as residents but choose to stay off the radar. And yes, UK buyers include both residents and non-residents.