The UK has long been the biggest foreign market for property in Spain, so how is the British market doing in the light of Covid-19 and Brexit? There’s a lot hanging on the answer, which turns out to be better than I expected. In this two-part report I first look at the latest numbers available, presented in the key charts below, and then share in part II to follow the feedback received from leading estate agents working on the market front-line in the areas most popular with British investors.
So, first the key numbers quantifying British demand in the second quarter.
In Q2 there were 1,003 Spanish homes acquired by British buyers, according to data from the Association of Spanish Land Registrars (charts above and immediately below). The UK is still the biggest national market by a wide margin, almost double the French and German markets combined.
British purchases in Q2 were 54% down compared to the same time last year, following on the heels of five quarters of negative growth. The British market was already on the slide before the coronavirus struck, but showed no signs of collapsing in the face of Brexit and the weaker pound. Covid-19 has proved to be much more damaging than Brexit.
Most other foreign markets fell by similar amounts, so Covid-19 has not hit the British market harder than others. Even the French market declined more than the British (-56%), which is surprising considering that most French purchases take place in Catalonia, just across the border with France.
With the latest numbers in hand we see that British buyers were 12.3% of the foreign market in Q2, down from 24% in mid-2015, but not far below the long term level of around 14%. Despite all the obstacles that have been thrown in their way, British buyers are still number one in Spain, and there’s no obvious reason to think that will change anytime soon, now that Brexit is already a reality.
Finally, a look at sales compared to the strength of Sterling. So long as the pound doesn’t reset significantly below 1.10 EUR/GBP then demand could recover to between 2,000 and 2,500 sales per quarter once the coronavirus crisis is behind us, assuming the bug doesn’t deal a structural blow to British demand for property in Spain.