Spain failed to attract more foreign buyers last year after eight years of continuous growth, but that doesn’t mean a crisis is around the corner.
Foreign buyers were involved in 62,827 Spanish home purchases in 2019, according to the latest market report from Spain’s Association of Land Registrars, based on a sample of recorded sales (so the exact number of foreign buyers might be slightly different).
That translated into a decline of 4.1% year-on-year in 2019, the first decline in the number of Spanish homes bought by foreign buyers this decade.
Local demand was down 2.2% to 441,048 last year, meaning an overall market decline of 2.5% to 503,875 Spanish homes sold in 2019.
By nationality the British were once again by far the biggest group with 8,726 homes purchase (14% foreign market share), followed by the French and Germans.
France was the only big market to post a gain in buyers last year, up 1.2%, whilst the UK was down 14.3%, and buyers from the relatively small markets of Sweden (-25.7%) and Switzerland (-31.3%) went very cold on Spain in 2019.
Despite the contraction in foreign demand last year, the market share of buyers from abroad remained stable at 12.5% of the market, as local demand also shrank last year.
Foreign demand for Spanish property declined in 2019: Why now, and where next?
The foreign market has had a good run with continuous growth since 2010, and it was inevitable that the expansion would run out of steam eventually, as happens in all property markets. The question is why now, and what to expect next?
In my opinion, foreign demand for Spanish property finally stopped growing last year in the face of growing headwinds and abating tailwinds, which I describe in detail here: The headwinds facing the Spanish property market at the end of 2019
That said, the decline last year was a mild 4%, not a big slump like 2008, so there is no sign yet that foreign buyers are stampeding for the exit en masse. And as I pointed out in my article on Spanish property sales to foreign buyers in the last quarter of 2019, it looks like falling demand has bottomed out in the UK, and even started to improve in the other countries.
Nevertheless, the decline in foreign buyers last year, and the downward trend we can now see, will present a challenge for all the new developments currently for sale on the Costa del Sol and the Costa Blanca, many of which are targeting foreign buyers.