A high-end renovator in Madrid claims that luxury home sales in the Spanish capital are down 20% thanks to political gridlock that has left the country rudderless and heading towards another General Election in November.

Despite the Spanish Socialists (PSOE) party’s strong performance led by Pedro Sánchez in the April General Election, the PSOE failed to reach agreement to form a Government with the hard-left Podemos party led by Pablo Iglesias, with whom left-wing relations are poisonous. As a result there will be another General Election in November, though it is far from clear that will resolve the gridlock.

With four General Elections in as many years, Spain is going through a period of political instability the likes of which the country has not seen since the restoration of Democracy over 30 years ago. This instability is putting off foreign investors in Madrid, many of them from Latin America, leading to a slowdown in high-end sales, claims Uxban, a company that develops luxury renovations for sale. As a result, high-end homes now take between 25% and 50% longer to sell.

The political instability resulting from the gridlock is undermining the confidence of foreign buyers, argues Gonzalo Robles, CEO of Uxban, who points out the foreign investors tend to have bigger budgets than locals, and have been driving the high-end market segment in recent years.

“When those clients read the papers back home the news from Spain is there is no government and fresh elections,” says Robles, quoted in the local press. “That instability is enough to delay an investment decision in the short to medium term.”

60% of Uxban’s clients are foreign investors, and many of them are interested in the Spanish Golden Visa scheme. “For clients from Colombia, Mexico, and Peru, a residency permit in return for a real estate investment of €500,000 is a big draw,” explains Robles.

Fresh elections will provoke “an undesirable situation as politics has a big impact on the perceived country risk of an investment,” warn Uxban.

In the current uncertain global environment, with a US-China trade war, Brexit, and Germany flirting with recession, a stable Government in Madrid with investor-friendly policies would be an attractive refuge for international capital, creating jobs and wealth, argue Uxban.