Spanish home sales involving foreign buyers were down 25% in 2020, thanks mainly to the coronavirus pandemic.
There were 47,293 Spanish home sales involving foreign buyers in 2020, down 24.7% compared to the previous year, according to the latest data from the Association of Spanish Land Registrars.
The overall market fell by 17% to 419,898, including a 15.5% fall in local demand to 372,605.
As a result, foreig demand made up 11.3% of the Spanish property market, down from 12.5% in 2019.
Foreign demand was hit harder than local demand by the coronavirus pandemic for understandable reasons. Travel restrictions made it harder for foreigners to visit Spain to search for and purchase properties.
By countries, the biggest declines came from China and Russia, in both cases down by more than 40%. China and Russia are the two biggest markets for Spanish Golden Visas, so that segment of the market took the biggest hit from the pandemic. The UK was down close to 30%, partly due to Brexit, whilst most other big markets for second homes in Spain were down around 20%.
Decline started before Covid-19
The coronavirus can’t be blamed for all the decline in foreign demand, which started to fall in 2019 after peaking in 2018. You can see from the next chart how most of the big foreign markets were already shrinking in 2019, before the impact of Covid-19.
Had the 2019 trend towards lower demand continued in 2020, we would have seen the market shrink by around 5%, not the 25% we got thanks to the coronavirus.
Other factors that might have contributed to the softening of foreign demand in 2019 and 2020 include higher property prices, political instability, government hostility towards foreign investors in some areas, and Brexit disrupting the biggest foreign market for Spanish property – the UK.
Official indifference towards private property rights is bound to be another factor turning off foreign investors, who have more choice than local buyers, and can opt for countries where property rights are better protected than Spain.
Investors from as far afield as China are well aware of the squatter risk in Spain, and many rule out the country as a result. The Spanish government’s official indulgence of squatters comes at a high price to the country as a whole.