After almost a decade of uninterrupted growth, it looks like foreign demand for property in Spain might have peaked out for this cycle.

Foreign buyers were involved in 15,379 Spanish home purchases in the third quarter of the year, according to the latest report from the Association of Spanish Land Registrars, based on a sample of recorded sales (so the exact figure of foreign buyers might be slightly different).

Foreign purchases were down 5% in Q3 compared to the same period last year, and it was the third consecutive quarter of declines, as illustrated by the next chart.

Given that foreign demand has fallen every quarter so far this year, it is a certainty that that full year results will show foreign demand falling in 2019 for the first time since 2009.

Foreign demand by nationality in Q3 2019

The biggest single nationality was once again the British with 14% of the market (2,193 purchases), followed by the French and the Germans. The market share of countries that account for less than 500 acquisitions each quarter – grouped together as the ‘Rest’ in the charts – keeps growing steadily, and reached 49% of the foreign market in Q3, as foreign demand for Spanish property gets ever more diversified even as it shrinks.

Demand fell in most countries, led by the Ukraine (-22%), Sweden (-21%), and the UK (-16%). Countries where demand increased were scarce, with only Morocco (+15%), Russia (+11%), Norway (+8%), France (+4%) and Algeria (+3%) posting gains in the period.

Local demand also falling

Local demand also fell in Q3, by 8.5%, even more than foreign demand. As a result, the market share of foreign demand remained almost unchanged at 12.6% in Q3.

With both foreign and local demand cooling down at the same time it looks like the Spanish property market is heading towards a change in the cycle after a relatively short period of overall growth since 2014. Can we expect a crash, like last time? Not according to the latest analysis from Funcas, a foundation representing savings banks in Spain.