Home » US Demand surging with strong Dollar

US Demand surging with strong Dollar

american usa demand for property in spain

Like the Brits before them, Americans are buying property in Spain in ever greater numbers on the back of a strong currency, though there are also other factors driving their fast-growing appetite.

Americans purchased 1,162 homes in Spain in the first half of the year (chart above), up 76% on the same period last year, and up 88% compared to 2019, pre-covid. The growth in US demand in the first half was the strongest of all countries outside the EU.

If you look at an index of foreign demand broken down by nationality with a base period of H1 2013, when the Spanish property market started to recover after a long slump, US demand has increased the most, as illustrated by the next chart.

american buyers of spanish property

What is driving the increase in American demand for Spanish property?

Increased purchasing power on the back of a strong USD is a big part of the story. The Dollar rose by 10% in the first half of the year, went on to break parity with the common currency in August, and peaked in late September up by 18.5% in the year-to-date, before falling back to 9% in late November, as you can see from the next chart.

A 10% appreciation of the Dollar against the Euro means US buyers with Dollars can buy a property in Spain 10% cheaper than before. Given that Spanish property already looks relatively cheap compared to other western property markets, one can see how a strong Dollar might clinch the deal for US buyers already interested in Spain.

The figures from the notaries confirm that US demand has grown strongly this year, but where are they buying? Using figures from the registrars that are not publicly available I estimate that approximately 40% of US buyers are heading for Andalusia, and 30% of them to Malaga province, home to the Costa del Sol. Around 23% head for Catalonia, primarily Barcelona, 14% buy in the Valencian region, primarily in Alicante, home to the Costa Blanca. 10% go for Madrid, and 5% for the Balearics. According to the notaries, in the first half of this year Americans were the biggest group of foreign buyers in Madrid (11% of the foreign market) and Navarre (45% of the market), and the second biggest group in the Basque Country (12%).

foreign demand for property in spain map
LEFT: Non-resident buyers top two nationalities . RIGHT: Resident/expat top two nationalities. PERIOD: H1 2022

Despite being the biggest foreign segment in Madrid, I’m pretty sure that more Americans buy on the Costa del Sol than in Madrid, just not enough to rank in the top two. So I turned to Sean Wooley, head of Cloud Nine Spain, an estate agency based on the Costa del Sol, with whom I have just started doing an ‘Inside Track’ monthly video podcasts looking under the bonnet of the Spanish property market (or under the hood, as our US friends would say), for his views on the factors driving US demand. 

Sean confirms that US buyers have arrived in numbers on the Costa del Sol. “Of our last 20 sales half have been to North Americans including Canadians, whereas before we might see one or two buyers a year,” he says. “They now account for 50% of our business, at least in the last few months.”

Turning to the drivers of US demand “the exchange rate is obviously a massive factor,” says Sean, but there are several other prominent reasons, he points out. “Spain is too far for holiday homes so most of our clients are buying villas to relocate here and put their kids in school, whilst maintaining family and business ties with the US, now that work-from-home is normal.” explains Sean. “They tell us they are a bit fed up with the situation back home, and they don’t feel their kids are safe in US schools. They are drawn to the Costa del Sol with its similarities to parts of the US like California in climate and landscape, and have good access to the whole of Europe thanks to Malaga airport. The Spanish Golden Visa is another attraction for those investing more than 500,000€ of their own money on Spanish property.”

With the Fed aggressively raising US interest rates, global uncertainty boosting demand for Dollars, and the Eurozone struggling economically, there is not much reason to think the Dollar will fall back to where it was last year. But even if the Dollar does depreciate against the Euro there are other factors driving US demand, so American buyers are probably here to stay.

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