Home sales involving a foreign buyer have declined significantly more in Andalusia than almost all other Spanish regions. Why might that be?

Home purchases by foreigners fell 9pc in Andalusia in the first quarter, compared to -2pc in Catalonia, no change in the Balearics and the Valencian region, 2pc growth in Madrid and 7pc growth in Murcia, all according to figures from the Housing Ministry based on sales witnessed by notaries in the period. Only the Canaries did worse, with sales down 17pc. Figures from the registrars illustrated in the chart above are even worse, with foreign sales down 17pc in Q1.

Furthermore, the pattern of declining sales has been much more pronounced in Andalusia since the end of 2022 than in Catalonia, the Valencian Region, Madrid and Murcia. So the numbers clearly show that foreign demand has cooled much more markedly in Andalusia, home to the Costa del Sol, than in most other regions of interest to foreign investors.

According to Marleen De Vijt, head of the Azul estate agency specialising in the Dutch and Belgian markets, it boils down to price. Andalusia has reached a “tipping point” she argues, that is pushing buyers away from Andalusia to other regions in search of better value.

“In Andalucia, the price of new-build homes has risen much faster than in other regions such as Murcia and the Valencian Community,” says De Vijt. “Today, you need at least €350,000 to €400,000 in Andalucia to buy a new property. But there are far more buyers below €400,000 than above. Andalucia has therefore reached the tipping point where buyers are looking to other regions because their budget is not sufficient for a purchase on the Costa del Sol.”

The Azul estate agency is seeing the shift clearly in their own sales numbers. “Over the last 10 years, we have seen Costa Blanca and Costa del Sol converge in terms of the number of sales,” says Marleen. “Before 2014, 30pc of our sales were on the Costa del Sol and 70pc on the Costa Blanca; by 2022, it was 40pc and 60pc respectively, so we could see the Costa del Sol gaining market share. Now we see the numbers going the other way again.”

Buyers from Belgium, who represent 5pc of the foreign market for property in Spain, are switching away from the Costa del Sol more than Dutch buyers (4.8pc of the market in 2023), as they tend to have lower budgets. “The average Belgian’s budget for a purchase abroad was €320,000 euros in 2023 (not just for Spain), so you see that Costa del Sol is increasingly unaffordable for them,” explains Marleen. “In the Netherlands, however, there is a bit more budget available because local property prices have risen significantly in recent years, furnishing the Dutch with more equity to buy in Spain. The Dutch also tend to prefer the Costa del Sol more than the Belgians, who prefer the Costa Blanca.”

Budgets have been squeezed across Europe in recent years, including in the UK – the biggest market of all. As buyers become more price sensitive, competition between the costas will only get fiercer.