The latest report from the Spanish notaries’ association shows 2021 was a record year for foreign demand, and the market has more than recovered the ground it lost to the pandemic in 2020.

Foreigners bought 111,743 homes in Spain in 2021, up 52% compared to the pandemic year of 2020, and 9% compared to 2019, all according to figures just released by the notaries. Put another way, 2021 was a record year for foreign demand, as you can see from the chart above, which combines foreign resident (FR) and foreign non-resident (FNR) demand. With these figures in hand one can argue that foreign demand has more than recovered from the pandemic.

These figures paint a very different picture of the foreign market than the ones from the Spanish land registrars’ association, which I reported on in March (see article: Foreign demand for Spanish property in 2021).

According to the registrars, foreign buyers were involved in just 60,946 home sales, and foreign demand ended the year 3% lower than 2019, allowing me to say that “the market has not fully recovered from the pandemic.” The latest figures from the notaries turn that conclusion on its head.

What explains the big difference (50,797, meaning the notaries are 83% higher) in the figures from the two sources, and which one is right? I don’t know the answer to the first question (anyone have any ideas?) but I have more confidence in the notaries’ figures, which are based on actual sales, rather than the sample-based figures from the registrars.

Continuing with the notaries’ figures, which provide a breakdown between foreign residents including economic migrants and lifestyle expats (economic migrants dominate this segment), and foreign non-residents, who by definition are buying second-homes and investments, we see that foreign residents bought 66,642 homes (+40% YoY) and FNRs bought 45,101 homes (+52%). In the chart below you can see how 2021 was a record year for foreign residents, but FNRs were still 4% below the peak in 2017. However, both segments were above the pre-pandemic year of 2019, allowing one to claim that foreign sales have more than recovered the ground lost to Covid-19.

Understandably both the decline and recovery of sales around the pandemic was more pronounced in the FNR segment, as is clear in the next chart showing the year-on-year percentage change in sales in each segment. Travel restrictions hit FNR demand the most in 2020, which also meant a bigger recovery in 2021.

In terms of market share, foreign buyers made up 17% of the Spanish housing market in 2021, up from 16.5% in 2020, but down from a peak of 20% in 2015, as you can see in the next chart.

Foreign demand by nationality in 2021

If you look at foreign demand for property for sale in Spain by nationality in 2021 you find the UK in the lead with 12,186 sales (+25% yoy) followed by Germany with 10,868 sales (+81%). So the UK was still the biggest market, but Germany had the fresher wind in its sails. If the growth rate differential stays the same this year, Germany will be the biggest market in 2022.

However, if you look at nationalities in the FNR segment (next chart), Germans were already the biggest group of holiday-home buyers in 2021, with close to 100% growth compared to the UK’s relatively feeble 17% growth against even a pandemic year! I assume that if the pandemic had never happened, UK demand in 2021 would have been deeply negative compared to 2020 as a result of ‘real’ Brexit kicking in at the start of the year.

Foreign demand by Spanish region in 2021

The data from the notaries also allows us to see how foreign demand was distributed regionally. The Valencian Community, home to the Costa Blanca, was the most popular destination with 29,000 sales (+40% yoy), followed by Andalusia, home to the Costa del Sol, with 22,625 sales (+53%). Almost 90% of demand goes to just 6 regions: the Valencian Community (26% of the market), Andalusia (20%), Catalonia (16%), Madrid (8%), the Canaries (7%), the Balearics (6.5%), and Murcia (5%). Of these regions growth was highest in the Balearics (+77%) and Andalusia (+53%).

Foreign spending by nationality and region

The figures also let us see how much foreigners spend on Spanish property by nationality and region. The Swedes had the biggest budgets, spending on average 2,760€/m2, followed by the Danes, Germans, and Swiss. The British spent below the average at 1,887€/m2. As you would expect, economic migrants from Romania and Morocco have the lowest budgets.

By region, budgets are the highest by a wide margin in the Balearics, where foreign buyers spent an average of 3,689€/m2 on property in the islands. At the other end of the scale, foreigners spent just just 481€/m2 on property in 2021.

Conclusion

The latest figures from the notaries show that 2021 was a good year for foreign demand, with a record number of sales that more than recovered the ground lost to the pandemic in 2020. Given that the expansive cycle of foreign demand that began in 2011 had run out of steam by 2019, a year in which the number of foreign buyers declined by 1%, it looks like the pandemic gave foreign demand for property in Spain a fresh impetus in 2021. My surveys back in 2020 near the start of the pandemic showed that most people expected foreign demand to suffer long-term damage, so many of us were wrong about that.