The answer juxtaposes the fortunes of the two biggest markets for property in Spain.
Now that I have a Spanish property data hub at my fingertips, I decided to compare the performance of the main international markets for property in Spain from 2007 to the present.
Using data from the notaries I created an index with a base period of H1 2007 when the sun was beginning to set on the Spanish real estate boom of that decade (or the bubble was beginning to burst, if you prefer) plotting demand from all the main markets up until the first half of this year, the latest period for which data is available.
First of all, let’s compare the performance of foreign demand with local (Spanish) demand over that time frame. In the chart below you can see that foreign demand recovered quite quickly and was already above the base period by 2014, ending up 120% higher by the first half of this year.
Spanish demand, in contrast, has never recovered to where it was in 2007, and was still almost 30% below in the first half of this year. Growing foreign demand has played a big part in Spain’s property market recovery, which has been a boon for the Spanish economy.
Now let’s look at how foreign markets have performed over the same period. As you can see in the next chart, Germany has done the best (+680%) whilst the UK is still almost 30% below where it was in 2007. Perhaps just a coincidence but Spanish and British demand are in almost exactly the same place.
Back in 2007 British demand was stratospheric on the back of a strong economy before the financial crisis hit, whilst the German economy had been through some difficult years. In those years many of the big estate agents in Mallorca that had grown fat on German demand had to swivel to the British market or die.
The UK is still the biggest foreign market for Spanish property, followed by Germany, which has overtaken France as the second-biggest market in recent years. But as you can see from the final chart, the index of British demand has flatlined since 2007, whilst German demand has gone up and up.