Foreign demand starts 2022 with strong growth

Foreign demand for property in Spain has started 2022 with blistering growth having recovered all the ground lost to the pandemic.

Foreigner buyers were involved in 21,638 Spanish home sales in the first quarter of 2022, up 73% on the same period last year, according to the latest quarterly property market report from the Spanish land registrars’ association.

In the chart above, which plots foreign purchases in the blue columns (left axis) and year-on-year change in black (right axis), you can clearly see how the foreign appetite for property for sale in Spain was temporarily crushed by Covid-19 in Q2 of 2020 before recovering strongly in 2021, and surging to new highs this year.

Local demand has also stayed strong this year with 142,661 home sales up 22% compared to last year, but that’s mild growth compared to the 73% increase in foreign demand. The next chart shows total demand for property in Spain, both foreign and local combined.

total demand for property in spain q1 2022

As a result of the stronger growth in foreign demand the market share of foreign buyers in the Spanish property market rose to 13.2% in Q1, up from 12.6% at the end of 2021, and the highest level since Q4 2017. The next chart illustrates how foreign buyers are gaining market share in the Spanish real estate market. 

spanish property market foreign share q1 2022

The next chart compares the annualised change in both local and foreign demand, showing how foreign demand has started the year with much stronger growth than local demand.

How much did foreigners invest in Spanish real estate in the first quarter of 2021? If you assume an average investment of 200,000€ that would mean around 4.3€b in the first quarter.

Nationalities

Where did foreigners investors with an appetite for Spanish property come from in the first quarter of the year? The next chart breaks down buyers by nationality, and combines all the smaller markets into one big group called ‘Rest’. As you can see from the chart, the British were the biggest single nationality of buyers, as they have been for every quarter since records began, with the exception of Q3 last year, when German buyers briefly overtook them. But the British are no longer as dominant as they were, being only 27% bigger than the Germans, compared to almost double in the years before Brexit.

foreign demand for property in spain

Which markets grew the most in Q1 2022? The next chart answers that question showing the Netherlands in the lead with growth of 190% followed by Poland, Norway and Germany, and the two biggest sources of economic migrants – Romania and Morocco – posting the lowest growth. So it looks like the surge in foreign demand in Q1 is mainly driven by second-home demand amongst buyers from northern Europe.

Bear in mind that the figures for foreign demand from the registrars differ significantly from the notaries, who also provide periodic data on foreign demand for property in Spain. The notaries counted 83% more foreign buyers in 2021 than the registrars (111,743 vs. 60,946). If the notaries are right, foreign demand for property in Spain is much higher than the registrars’ figures show. 

Whichever figures you look at, the story is the same – foreign investors are piling into Spanish property like they haven’t done since the real estate bubble year of 2007.

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