The Spanish Government’s plan to impose a higher tax (up to 100%) on property purchases by non-resident buyers from outside the European Union has caused an international stir. Framed as an urgent measure to address housing affordability, the government argues that such buyers, labelled as “speculators,” are exacerbating the housing crisis by driving up prices for local residents.

Part I: Introduction and policy overview

The government’s proposal

On Monday, 13 January 2025, Spain’s Socialist Prime Minister Pedro Sánchez announced plans to impose punitive taxes of up to 100% on property purchases by non-resident buyers from outside the European Union. Framed as a response to the housing affordability crisis, the policy seeks to price this group out of the market, with the Prime Minister describing them as “speculators” responsible for driving up prices for locals. Days later, at a Socialist Party rally in Extremadura, Sánchez went further and suggested banning them from the market altogether.

Examining the numbers

The government claims that non-EU foreign non-residents (FNRs) purchased around 27,000 homes in Spain in 2023. However, data from the notaries shows only 18,648 purchases by this group that year, calling into question the credibility of the official narrative. According to the government’s own figures, 27,000 purchases would account for 49% of all foreign non-resident buyers in 2023, whereas notarial data puts the non-EU share at just 32%.

A small and shrinking segment

Over the last decade, this segment has accounted for a shrinking share of the Spanish housing market, representing less than 3% of all transactions each year. In the past five years, the average has been just 2.7%. In 2024, their share fell to one of the lowest levels outside the pandemic years. Rather than growing in importance, this segment is gradually declining and appears increasingly marginal.

A scapegoat for political gain

Within the broader foreign buyer market, non-EU FNRs now make up less than 14% — a small minority within a category dominated by EU expats and second-home buyers from countries such as France and Germany. While Sánchez cannot restrict EU buyers due to EU membership obligations, he can target non-EU buyers. As a result, this segment has become a convenient scapegoat: politically expedient to blame, yet economically insignificant.

Who are the non-EU buyers?

Looking at nationalities within this group, most buyers fall into two distinct categories: high-income countries like the UK, USA, Norway and Switzerland, whose citizens primarily buy holiday homes in coastal areas; and countries like Morocco, Colombia and Venezuela, whose nationals are more likely to be economic migrants purchasing primary homes. Neither group fits the profile of speculative investors. Most nationalities in this segment recorded fewer than 1,000 purchases in 2024 — far too small, and geographically too dispersed, to have any meaningful effect on local housing prices.

Even buyers from China and Russia, often associated with the Golden Visa scheme, had only 1,382 purchases between them in 2024. In the context of a national housing market with 560,000 transactions that year, their impact is negligible.

Where do they buy?

The only nationalities exceeding 1,000 purchases in 2024 were the British, Americans and Norwegians. These groups overwhelmingly favour second homes in urbanisations along the Mediterranean coast and islands — areas where demand from locals for affordable housing is relatively low. For example, 90% of British buyers gravitate towards Alicante, Malaga, Murcia, the Balearics, the Canaries, and Almería. Their transactions tend to involve villas or holiday apartments, not primary homes in affordability hotspots.

A misdiagnosis of the crisis

To portray this small, declining, and mostly coastal-focused segment as the cause of rising housing costs in cities like Madrid and Barcelona is not supported by evidence. The policy may be effective in attracting headlines and energising the government’s political base, but it is unlikely to improve housing access where the crisis is most acute.

Risk of unintended consequences

Moreover, the policy risks serious unintended consequences. By undermining demand for holiday homes on the coast and islands, it threatens to reduce sales, investment, jobs, and tax revenue in those areas, not to mention Spain’s international appeal. The economic damage could be substantial, while the benefits to housing affordability would be non-existent.

Conclusion

In short, the government’s proposed tax on non-EU FNRs appears to be a politically motivated gesture rather than a data-driven solution. The numbers tell a different story — one of a small and declining segment with little to no influence on housing prices for locals. The real housing crisis lies elsewhere, and this policy will do nothing to fix it.

Part II: Year-by-year data