New figures from the Spanish government reveal that foreign demand for property in Spain declined in the first quarter, driven by fall in second-home buyers from abroad.

Recent figures from the land registrars I reported here showed that the number of home sales involving a foreign buyer increased an annualised 8% in Q1 to 23,381, whilst the latest figures from the MITMA department of the Spanish government show that sales declined by 3% to 30,788. Explaining the reasons behind the difference would take up a lot of space and fall outside the scope of this article so I’ll just note that I consider the MITMA (and notary) figures a more reliable guide to foreign demand, although they don’t give us a breakdown by nationality, which the land registrars do.

The MITMA figures do, however, break down sales into foreign buyers resident in Spain (expats and economic migrants, two very different market segments), and foreign non-residents (FNRs) buying second-homes in Spain.

MITMA’s figures for Q1 show that total foreign demand fell by 3% compared to the first quarter last year – a modest decline – and was still the second highest level on record for Q1, as you can see from the chart above. So foreign demand declined in the first quarter, but remains strong by historical standards.

Expats vs. FNR second-home buyers

Expats were 55% of buyers (17,033) and FNRs 45% (13,755), with FNRs being more than 50% in Andalusia (69% in Malaga province, home to the Costa del Sol), 62% in the Balearics, 59% in the Canaries, and 56% in the Valencian region (68% in Alicante province, home to the Costa Blanca).

In volume terms, there were 4,982 FNR buyers in Alicante, 2,414 in Malaga, and 1,689 in the Canaries, which between them accounted for 66% of all FNRs buying a second-home in Spain. There were just 801 in the Balearics, where local politicians have been trying to pin the blame for high house-prices on foreign buyers. (Anyone interested in the housing market in Mallorca should read the Engel & Völkers Mallorca market report 2022-2023.)

Expat demand actually increased by 3% whilst FNR demand declined by 7%, so the overall decline of 3% was driven by declining second-home demand, as illustrated by the next two charts.

Local Spanish demand fell by 12% in Q1, more than foreign demand, boosting the market share of foreign buyers to a record first-quarter 19.5%, not far off the all-time high of 20.2% in Q3 2015 (final chart). Foreign buyers might not be as numerous as they were in the first quarter of last year, but they still appear to have a big appetite for real estate in Spain.

Delve into the Spanish property market data