# How much money do foreigners buying homes in Spain invest in the Spanish property market?

It’s a basic question I’ve never seen answered before. How much do foreigners buying homes in Spain invest in the Spanish property market each year?

It’s an interesting question because it gives you an idea of how valuable this industry is to the Spanish economy, and how big a market we are talking about in monetary terms for everyone involved in the industry. The bigger the contribution to the Spanish economy, the more politicians should take steps to promote the industry, and the bigger the market, the better it is for all market actors like buyers, sellers, and property professionals.

So, how valuable is the foreign segment of the Spanish property market? By which I mean how much does the market involving foreign buyers of homes in Spain turnover each year? (not including foreign funds investing in the Spanish housing market, and not including all the associated spending such as legal fees). To answer this question all we need to know is:

1. How many homes are sold in Spain in a given year
2. The average sales price
3. The number of foreign buyers as a percentage of the market

Using figures from Spain’s Association of Public Notaries, it is possible to answer these questions.

In answer to question 3, the latest foreign-segment market report from the notaries states that “The operations of foreign buyers represented 18.7% of total home sales in the period [the second half of 2019], in line with the average between 2012 and 2018.” So I use 18.7% to represent the share of foreign buyers in recent years, at least before the coronavirus crisis blew everything up.

Answering the other two questions is straightforward. I used the online database published by the notaries to get monthly home sales figures and average prices, allowing me to calculate the turnover value of the Spanish housing market in each month of 2019. I then add up the monthly figures to get the total value of the Spanish housing market in 2019, and take 18.7% of that to answer the question how much did foreign buyers invest in the Spanish property market in 2019. All the figures are given in the table below.

### More than 1% of Spanish GDP

The answer is foreigner buyers invested €17.1 billion in Spanish homes in 2019 (slightly less than in 2018), which means we are talking about a big and valuable market. Unless I’ve got these quick and dirty numbers badly wrong, that’s almost 1.4% of Spanish GDP in 2019.

And if you assume that 50% of foreign buyers did so without local mortgage financing, using equity from abroad, then housing attracted some €8.5b fresh foreign capital to Spain in 2019, not including the sizable investments made by big foreign investment funds, which are not included in these figures.

Note that, according to the Spanish Land Registrar’s Association, the foreign-buyer share of the market was 12.7% in Q4 of 2019, significantly lower than the share calculated by notaries. I can’t explain the difference without digging a lot more, but if you use the registrars’ figures, the foreign buyer segment turnover in 2019 would have been around €11.6b.

Let’s assume the figures from the notaries gives us the best picture. A market of this size should get lots of support and helpful attention from Spanish politicians doing what they can with fiscal and urban planning policy to help the market grow, creating wealth and jobs for Spain and their voters. In reality, many of the problems this market faces are created by the Spanish government, which seems to be unaware of the value of this market, and it’s potential to the Spanish economy. Spain could be the Florida of Europe, but it has never really lived up to its potential.

## Thoughts on “How much money do foreigners buying homes in Spain invest in the Spanish property market?”

• ##### MarkDavidsays:

Thanks for a very interesting and well-researched article, Mark. You’ve obviously put a lot of time and effort into it.
I don’t think it will ever be possible to get an accurate figure of average – or indeed individual or regional – market prices due to the one fact that we all know yet sometimes fail to acknowledge. Namely, that Spain is still very largely a black money economy. This applies to the property sector just as to other sectors. It wouldn’t be appropriate to go into details here, but the legal profession is far from blameless in this regard.

• ##### Vendidosays:

Having just sold a property that I purchased in 2003, I am not sure your comment is still accurate. Most certainly pre financial crisis black money was the norm. The reason being that sellers were making huge profits.
That is no longer the case. My recent sale took a while to achieve and during the process I spoke with countless agents.. Without exception they all laughed at the idea of black money nowadays.
Like many people, I was caught in the trap of having under declared on purchase I have a paper profit. In reality a huge loss.
I believe declared values nowadays are fairly accurate

• ##### SurveySpainsays:

Hi Mark. I think you will find that B money is much less prevalent nowadays than it was before. The jailing of lawyers, notaries, bank managers and others, who used to be openly involved, concentrated their minds marvelously and now the only way it really happens is between the buyer and seller direct in the bar beside the notary. Much more of a rural than urban problem now. Foolish of a buyer to do so, as it means they take on part of the tax debt of the seller.

• ##### Vendidosays:

It would be interesting to know the reverse of this coin.
How much money leaves Spain as a result of foreign owners selling and moving proceeds out of Spain.
My guess is that the net amount invested in Spain is very much lower than €17B.

• ##### SurveySpainsays:

Thanks Mark Stucklin for all your work on this. To be added to the purchase investment is all the further Improvement investment into the property, plus taxes and license fees paid, restaurants shops, leisure businesses, etc. supported. The contribution of the residential second home market is huge to both the national and local economies. Increasingly, I think we are going to see more people coming here as a lifestyle choice, having discovered that they can work perfectly well or even better from home than in an office. Good Internet connection is vital and most urban areas of Spain have that.

• ##### Paulsays:

There are a number of assumptions here, though, that would change the results considerably.

Do foreign buyers purchase average properties? Or do they buy much more expensive ones, or much less expensive ones? Obviously that would change the results.

What do they do with those properties? If they leave them vacant, then they’re not really having the same impact as someone who buys a property and then lives in it; the latter has a much greater impact on the local community.

What if they’re buying them and turning them into holiday/short-stay lets? Is that taking long-term housing off the market? We’ve all heard of what’s happened to the long-term rental market in some neighborhoods in Madrid and Barcelona- it’s been savaged by foreign investors buying up flats like mad and renting them on Airbnb type platforms. If you’re the local, regional, or national Spanish government, do you want to encourage that kind of thing?

And being from the US… I have to say that “being the Florida of Europe” is not necessarily something that anyone would aspire to!