Foreign demand for Spanish property in 2021

Foreign demand for Spanish property in 2021

Foreign demand for Spanish property has bounced back from a pandemic slump in 2020, but the underlying trend is not year clear.

Last week I looked at the numbers on foreign demand for property in Spain in the 4th quarter of 2021 showing how the year ended on a high-note with sales the highest they have been since the boom year of 2007. Here we will look at the annual figures to get a bigger picture of where the market has come from, which might help answer where we are heading.

The chart above, showing home sales to foreigners in blue columns measured on the left axis, and the annualised change (black line measured on the right), tells the story of Spain’s housing market boom, bust and recovery both before and after Covid-19. Importantly you can see how foreign demand started shrinking in 2019 after eight uninterrupted years of growth, so foreign investors were already cooling towards Spanish property before the virus came to dominate all considerations.

According to data from the Spanish land registrars’ association, 60,946 home sales last year involved a foreign buyer, up almost 30% compared to 2020 when the market was impaired by the arrival of Covid-19 and the lockdown response. With the annual figures in hand we can say that foreign demand ended up 29% higher than 2020, but 3% lower than 2019, suggesting that the foreign market has not fully recovered from the pandemic.

In comparison, local demand of 503,623 was up 35% on 2020, and 14% on 2019, meaning demand was higher than before the pandemic. The next chart shows local and foreign demand together over the years, ending with 564,569 total Spanish home sales in 2021, up 34.5% on 2020, and 12% on 2019, overall higher than before the pandemic thanks to strong local demand.

As a result, the foreign share of the Spanish property market fell to 10.8% in 2021, the lowest it has been since 2012.

Foreign demand spanish property market share 2021

Foreign demand by nationality in 2021

Looking at the nationality of foreign buyers, once again the British were the biggest group despite Brexit, though they were knocked into second place by the Germans in Q3. It will be interesting to see if that was a one-off thing, or the start of a trend towards German dominance of the foreign market for property for sale in Spain. This will become clearer in the course of 2022.

Foreign demand by nationality for Spanish property in 2021

Some markets recovered more than others. Switzerland saw the biggest increase of more than 100%, but despite its big purchasing power it’s a minor player that has never really shown much interest in Spanish property, and probably isn’t about to change. More interesting was the 58% increase in German demand leaving it higher than it was before Covid, and the feeble 8% increase in British demand that left it lower. France was another big market that finished 2021 smaller than it was in 2019.

This is how the foreign market was divided up by nationality in 2021. Roughly half the market came from the UK, Germany, France, Belgium, Sweden, Italy, Holland, and Russia.

Foreign demand market share Spanish property in 2021

And here is a bar-chart race of foreign demand by country since the start of 2013. It graphically makes the point how much the UK has dominated this market until recently.

In my next article on foreign demand I will look at the headwinds / tailwinds driving and holding back the market in 2021 and going into 2022, which might help us understand where we are heading. 

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