Foreign buyers are once again in the Spanish media spotlight, this time blamed for pushing coastal and island property prices beyond the reach of many Spaniards. The diagnosis is partly right. The implied cure is where things get more complicated.

El País, one of Spain’s biggest newspapers and a reliable voice of the Spanish Left, has turned its attention to the impact of foreign buyers on the housing markets of the coast and islands.

The thrust of the article is simple enough: foreign demand has hit record levels, foreign buyers have more money than the average Spaniard, and in places like the Costa del Sol, Alicante and the Balearics they are helping drive prices beyond the reach of the Spanish middle class looking for a second home by the sea.

None of that is exactly wrong. According to the figures cited, foreign buyers completed close to 100,000 home purchases in Spain in the 12 months to the first quarter of 2026, a record (true, but also starting to fall). Alicante stands out, with almost one in two homes sold to a foreign buyer, followed by Málaga, the Balearics and Santa Cruz de Tenerife with foreign market shares above 26%.

When a buyer with higher purchasing power enters a market with limited supply, prices rise. Such is life.

But what is the alternative?

The political subtext, however, is harder to ignore. In Spain’s current housing debate, foreign buyers are increasingly framed as part of the problem: outsiders with deeper pockets pricing locals out of their own country.

So what is the proposed solution? Ban foreign buyers? Or at least ban the ones the Government can more easily target, such as non-EU, non-resident buyers?

That might reduce demand in some second-home markets. It might even make some coastal properties cheaper, allowing a few more Spanish households to buy a second home by the sea. But it would not solve Spain’s real housing problem, which is the shortage of affordable homes where people actually need to live and work, especially in cities and employment centres.

It would also come with costs. Foreign buyers bring wealth into Spain. They support local businesses, generate tax revenue, create liquidity in otherwise illiquid housing markets, and sustain many coastal economies. Without them, some areas would be cheaper, yes, but also poorer.

Foreign money is not the only reason homes are expensive

There is another issue that rarely gets the same attention in this debate: Spain’s high transaction costs.

Buying a home in Spain is expensive before you even get to the price of the property. Transfer tax, stamp duty, notary, registry and professional costs all add up, and these costs hit buyers with lower budgets hardest. They also make buying and selling more risky by raising the cost of entry and exit.

Yet you do not often hear El País calling for lower property taxes to make home-buying more affordable for ordinary Spaniards. Funny, that.

Foreign buyers do push up prices in the markets where they concentrate. But blaming them is easier than confronting the harder questions: why Spain builds too little housing where people need it, why transaction costs are so high, and why policy keeps attacking demand instead of fixing supply.

Foreign buyers are part of the story. They are not the whole story.