Foreign demand for property in Spain declined by 5% in Q2, according to the latest data from the Land Registrar’s Association. Even so, it was one of the best quarters on record.

There were 22,706 home sales involving a foreign buyer in the second quarter of the year, a decline of 5% compared to last year’s all-time high for a second quarter, as illustrated in the next chart. Sales were 40% higher than 2019, showing that, for whatever reason, foreign demand for property in Spain has come out of the pandemic much stronger than it was before.

Nationalities

The British were once again the biggest group of foreign buyers of Spanish homes in the second quarter with 1,998 purchases, followed by the Germans and the French. The next chart shows sales by country focusing on nationalities that tend to buy second-homes and investments in Spain, and a pie chart showing each nationality’s share. Bear in mind that the pie chart excludes other nationalities like Moroccans who purchase in a completely different market segment, so it’s not showing the share by nationality of the total foreign market, just this segment of the market.

How did demand by nationality change in the last quarter?  Russian purchases exploded by 105%, followed by China with an increase of 45% and Poland with 18%. If you also include Ukraine in the analysis (not shown on the charts below) you find it at number two behind Russia with 66% growth. Clearly the war in Ukraine is increasing demand for property in Spain from Russia, Ukraine and Poland. 

At the other end of the scale. Swedish buyers declined by 35%, Germans by 24% and the British by 15%. Demand from the ‘rest of the world’, which is the biggest group of buyers (not in the charts), declined 14%, the first time it has declined since records began if you exclude the pandemic year of 2020. That might be a sign of trouble to come.

Regions

Where did foreigners buy homes in Spain in Q2 2023, and how much did foreign demand change in each region on a year-on-year basis? The next chart answer the question looking at regions of most interest to foreign second-home buyers and investors. The Valencian region was number one as usual, with a 36% share of this market, whilst foreign purchases declined the most in the Balearics (-28%) followed by the Canaries (-21%) and Andalusia (-20%). Foreign demand increased in Catalonia (+2%) and the Valencian region (+9%).

Foreign Market Share

Both local and foreign demand were strong compared to the years before the pandemic, only declining compared to last year’s boom. However, foreign demand, which declined by 5% in Q2 is holding up better than local demand, which declined by 8%, and this story of foreign demand growing faster or holding up better than local demand has been going on since the second half of 2021. As a result the market share of foreign buyers rose to 14.9% in Q2 and has settled around 15% in the wake of the pandemic, significantly higher than it was before the coronavirus came to town.

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