Overall foreign demand for property in Spain recovered surprisingly well in the first half of the year, show the latest figures from the Association of Spanish Notaries, but holiday-homes are still struggling to attract foreign buyers like they did in the years before the pandemic.

There were 47,683 Spanish home sales involving a foreign buyer in the first six months of the year, according to the latest data from the notaries. 34% of buyers (16,171) were non-residents buying second homes, and 66% (31,512) were foreigners resident in Spain. 

The chart above illustrates the evolution of foreign demand for Spanish property going back to the first half of 2007 (H1-07), showing how foreign demand has recovered from a pandemic-induced slump in the first half of 2020 without quite taking back all the ground it lost due to weakness in non-resident demand. 

Foreign demand includes expats living in Spain buying main homes and second-homes, and non-residents buying second-homes and investments. It also includes economic migrants getting on the Spanish property ladder, so the overall figures include disparate market segments. That said, the big picture suggests that foreigners in general are positive about Spanish property as an investment, otherwise they wouldn’t be buying in near record numbers.

In fact, foreigners living in Spain are buying property in record numbers, up 56% on the same period last year, and 3% higher than the previous record year of 2019, meaning expat demand has more than recovered from the pandemic. 

But non-resident demand, mainly northern-Europeans buying second homes in Spain, although up 47% compared to the first half of last year when lockdown was part of the picture, fell 8% compared to 2019, and 11% compared to 2018. 

In the following graph showing the year-on-year change in foreign demand broken down by residency, you can see that non-resident demand has been cooling off since around 2016. There’s much more than Covid-19 to this story, though continued travel restrictions in response to C19 do not help.

With local demand increasing 69% to 262,007 purchases (compared to foreign demand up 47% to 47,683), the market share of foreign buyers dropped to 18% in the first half, down from a peak of 26% in H2 2015, as you can see in the next chart.

If you look at foreign demand by country (next chart), Morocco (5,159) was number one for the first time ever, overtaking the Germans (4,186), and beating the British (4,614) to the top spot (Moroccans largely buy in a different market segment to the British and Germans). The following chart shows sales by nationality in H1, and the year-on-year change for each market. The biggest increases came from Switzerland, Morocco and Germany, whilst the biggest declines came from Norway, China, and the UK.

If you look at foreign demand by region, the Valencian Community was number one with 11,599 foreign purchases, followed by Andalusia with 9,197 sales, and Catalonia with 7,830. Of the regions of most interest to second-home buyers from abroad, sales rose the most in the Balearics, up 69%.

The notaries produce maps of foreign demand by region showing the top two nationalities in each region, with one map for resident demand, and another for non-residents. Without going into details that I’ll leave for a look at demand by nationality in subsequent articles, you can see that the French are now number one non-resident buyers in most areas, which the British used to be. Resident foreign demand is dominated by Moroccans and Romanians, though the Germans still dominate in the Balearics.

Lastly, if you look at non-resident demand (final chart below) you can see the Germans were the biggest group with 2,702 purchases, up 85%, followed by the British with 2,249, down 5%. When it comes to non-resident demand, Morocco and Romania are almost insignificant.

In conclusion, overall foreign demand for property in Spain has weathered the pandemic well thanks to strong resident demand, but non-resident demand for holiday-homes, which was already on the decline before the pandemic due to headwinds such as Brexit and Spanish officialdom, has lost even more momentum in the face of Covid-19, though high-end segments may be bucking that trend.