The number of foreigners buying property in Spain lurched down in the first quarter of 2020, partly due to the coronavirus Covid-19, but the underlying trend was already negative.

15,283 Spanish home sales involved a foreign buyer in the first quarter of the year (chart above), a decline of 6.4% compared to the same period in 2019, according to the latest figures from the Association of Spanish Land Registrars.

As you can see from the next chart, foreign demand has been declining ever since mid-2017, but demand started to pick up again in the second half of 2019, and the trend looked like it might turn positive in the first half of 2020. That was before the coronavirus changed everything.

The Spanish lockdown in response to the Covid-19 pandemic started on the 15th of March, shutting down two and half weeks of the first quarter, which was bound to have a negative impact on property-sales deeds registered in the period. It is possible that, had it not been for the pandemic, foreign demand in Q1 would have been higher than the year before.

Due to the fact that foreign demand fell more than local demand in Q1, the market share of foreign buyers fell to 12%, the lowest it has been since Q1 2014.

Foreign demand broken down by nationality

Looking at foreign demand by nationality in Q1, the UK, France and Germany combined were just over a quarter of the market, whilst the biggest 8 markets made up 51% of demand, and the ‘rest of the world’ 49%.

The UK was the biggest single market, with 1,936 buyers registered in the quarter, followed by France with 1,286, and Germany with 1,146.

One clear trend is the way in which UK demand, which always used to be way out in front, is getting closer in volume to French and German demand, as illustrated by the next chart.

Whilst overall foreign demand fell by 6.4% in the period, led by a 23% plunge in Russian demand, and a 14% decline in British demand, there was surprising growth in the two big markets of France (+4%) and Germany (+2%), not to mention a 10% increase in demand from the Netherlands, all three being tradition markets for holiday-homes in Spain.

Inconclusive

The subsequent coronavirus crisis makes it difficult to draw conclusions from these figures. Foreign demand for property in Spain had been on a downward curve for some time before the pandemic, but that trend might have been starting to turn, Brexit turbulence in the UK market notwithstanding. However, the arrival of Covid-19 has changed the world, not just the Spanish housing market, and we will just have to wait and see what happens in the quarters to come.

One forecast I can make with confidence, though, is that the foreign sales figures in Q2 will show much bigger declines than Q1, as the lockdown made it almost impossible for foreigners to buy homes in Spain in the second quarter.