British market

2024 Q1

Spanish property sales involving a British buyer declined by 11pc in the first quarter, but they were still the  biggest national group by a wide margin, show the latest figures from the Land Registrars’ Association.

1,965 Spanish home sales involved a British buyer in Q1, down 11pc on the same time last year, and 10pc below the ten-year average, as illustrated in the chart above.

The British share of the foreign market fell to 9.1pc, down from a high of 21.9pc in Q1 of 2016. Nevertheless the British still had the biggest market share, ahead of Germany in second place with 6.8pc.

The next chart compares sales by nationality in Q1, and shows how the UK is still the biggest foreign market for Spanish property despite an 11pc decline compared to last year. Germany and France declined even more, by 17pc and 24pc respectively.

The Registrars don’t break down sales by nationality and region on a quarterly basis, but the annual numbers give us a good idea of where the British buy homes in Spain. It’s fair to assume that sales were distributed in Q1 by region similar to the picture given in the pie chart below.

British demand under a Labour government

British demand for property in Spain is holding up surprisingly well compared to other countries in the period after Brexit and the pandemic, and it will be interesting to see what impact, if any, a Labour government back home has on British demand for property in Spain.

If Labour goes hard after private wealth and raises taxes you would expect that to drive more British buyers to Spain. However, if Labour also makes an even bigger mess of the economy than the Conservatives, and devalues the Pound, you would expect that to reduce British purchasing power in Spain. The chances that Labour will not go after private wealth / raise taxes and and that the economy does well are slim.

2023 Q2

British buyers no longer dominate the foreign market for property in Spain like they once did, and their share of the foreign market has been declining since 2015.

Approximately 1,998 Spanish home sales involved a British buyer in the second quarter of the year, according to the latest data from the Spanish land registrars’ association, down 15% compared to the same time last year, as illustrated by the chart above.

As a result of the decline in British buyers, and the growth of demand from other parts of the world, the British-buyer share of the foreign market fell to an all-time low of 8.8% as illustrated by the next chart.

Nevertheless, the British remain the biggest single group of foreign buyers of property in Spain by nationality, and purchases in Q2 were higher than the same period in 2013, 2014, and 2021 (and 2020, when the market was still largely closed by Covid). Of the eleven years from 2013 to 2023, Q2 this year was in seventh place in terms of sales, so below average but not a disaster (see final chart below). However, compared to Q2 2016, before the Brexit referendum, British demand is down by 30%.

2023 Q1

A snapshot of British demand for property in Spain based on the latest quarterly figures from the Spanish land registrars’ association shows that British buyers were once again the biggest group in the first quarter of this year, though less numerous than the same time last year.

2,216 Spanish home sales in the first quarter involved a buyer from the UK, down 15% on the same time last year, show the latest figures illustrated in the chart above. You can also see how British demand staged a decent recovery after the Covid-19 disaster before starting to cool off in the second half of 2022, and declining in the first quarter of 2023.

If you look at demand in the first quarter compared to previous years (next chart) you see that British demand was almost the same as 2019, slightly lower than 2018, and significantly lower than 2016 just before the Brexit referendum. So demand has recovered from the Coronavirus, but not from Brexit.

Compared to other countries, British demand declined fractionally more than German demand in Q1, but less than Norway and Sweden. Despite an annualised decline of 15%, the British were still the largest group of buyers by foreign nationality, head and shoulders above the Germans and the French.

British share of the foreign market

The British have long been the biggest group of foreigners buying homes in Spain but they no longer dominate the market as they once did. Back in 2015 almost one in four foreigners buying property in Spain were British, but by Q1 this year the British market share had fallen to 9.6% of the overall foreign market, and 17.1% of key markets, not far ahead of Germany and France, as illustrated in the next two charts.

British demand by region

Whereabouts in Spain did the British buy property in the first quarter of 2023? Regrettably the registrars don’t provide any information on a quarterly basis, but based on their annual figures for 2022, we can assume that around 34% of Brits bought in Andalusia (753), 31% bought in the Valencian region (687), 13% in Murcia (288), 11% in the Canaries (243) and 7% in the Balearics (155).

2022 Q1

British buyers have brushed off Brexit and the coronavirus pandemic to pile into the Spanish property market in numbers hardly seen since the Brexit referendum.

2,603 Spanish home sales involved a British buyer in the first quarter of the year, according to the latest figures from the Spanish land registrars’ association. Quarterly sales are presented in the chart above, with the blue columns showing sales, and the black line/area showing the year-on-year change (right axis).

As a result, British demand was up 72% compared to last year, and 20% compared to the pre-pandemic year of 2019, and almost on a par with the previous post-referendum high of 2,613 purchases in Q3 2018.

In Q1 the British market was once again the single biggest source of foreign buyers by a significant margin, with the next biggest nationality – the Germans – more than 20% smaller than the UK.

But the British market share dropped a fraction to 12% as other markets grew faster in the first quarter, as you can see from the next two charts.

With the UK outside the Eurozone it’s useful to compare the strength of British demand with the Pound to Euro exchange rate, which partly determines British spending power in Spain. As you can see in the next chart, the exchange rate has been fairly stable since the Brexit referendum, trading in a narrow band between 1.10 and 1.20 since 2016, so the exchange rate has not had much impact on demand beyond providing stability that investors tend to like.

British demand according to the notaries

The Spanish notaries’ association also provides data on foreign demand for property for sale in Spain broken down by nationality, in this case half-yearly rather than quarterly, including data on the residency status of buyers (expat and non-resident), budgets, and where different nationalities buy in Spain. The latest figures they provide are for the second half of 2021.

In the next chart you can see that non-resident demand recovered strongly in 2021, but British expat demand was the highest on record, with 2,903 purchases in the period. That helps explain why British demand was almost the highest it has been since the Brexit referendum. The near record numbers are being driven by British expats buying in Spain.

In the next chart you can see how British budgets compare to other nationalities. British buyers spent an average of 1,887€/m2 on property in Spain, below the foreign average of 1,940€/m2 and a long way from the spending of Swedes, Danes and Germans above 2,700€/m2. The British buy the most property in Spain, but they tend to focus on cheaper areas like the South Costa Blanca and spend less than other northern-Europeans. 

Finally, the British were the biggest group of foreign buyers of holiday-homes in 3 regions, and in the top-two groups in 7 regions. As expats they were number one in the Valencian Region, and top-two in 5 regions, as you can see from the maps below.

Why is British demand for property in Spain so strong?

Down in the Canary islands, where the first quarter is always the busiest time of the year for foreign buyers, Andy Ward, Director of Tenerife Estate Agents, reports that neither Brexit nor the pandemic has winded the UK market. “British demand is still very high and accounted for 43% of our sales – no other nationality even came close,” he says. “Brexit has had little to no impact on our profile of British buyers, many of whom are still working full-time and buying a long-term lifestyle investment they plan to use two or three times per year for one to three weeks at a time, so the 90/180 day rule doesn’t affect them. Higher up the age bracket retirees have options including the non-lucrative visa, which is fairly straightforward and easy to get, whilst those who can afford it are looking at the Spanish Golden Visa, which helps explain why demand has increased for  properties costing 500,000€ or more.”

Peter Robinson, who runs the Association of International Property Professionals (AIPP)* and gets to talk to lots of agents around Spain, thinks that remote working in response to Covid-19 by British civil servants is a part of the story. 

“British demand has been strong in Spain this first quarter, as reported by most members of AIPP,” he explains. “Long-held desires by older Brits to move to Spain have not been dented by Brexit or Covid. Younger digital nomads are also seeking somewhere with better quality of life to work remotely. The biggest story in the UK though, is probably the civil service union in a high-profile dispute with the government over the ‘rights’ of nearly 500,000 civil servants to work remotely outside of the UK, many in Spain. The government is pushing back, however, so it remains to be seen whether Spain, and other countries, will continue to be happy recipients of this well-paid cadre”. 

*The AIPP supports the The Alliance of International Property Owners (AIPO).

2021 Q3

British demand for Spanish property has recovered from last year’s Covid-19 slump, but is still lower than it was before the pandemic, mainly due to a steep decline in non-resident second-home buyers.

1,642 Spanish homes sales in the third quarter of this year involved a British buyer, up 8% compared to last year (chart above showing quarterly sales and annualised change), but down 26% compared to 2019, and 37% compared to 2018, all according to the latest figures from the Spanish Land Registrars’ Association. The British were the second biggest group of foreign buyers, behind the Germans. This is the first time the British have not been number one since records began.

The next chart, showing the annualised change in demand by country, illustrates how feeble British demand was in Q3 compared to almost all other nationalities. Only Norway and Belgium were lower. 

As a result of the UK’s declining demand for Spanish property, the UK’s market share of foreign demand fell to 9.9% in Q3, almost the lowest level on record. The next chart illustrates the obvious decline in British market share since its peak just before the Brexit referendum in 2016.

British demand used to be obviously correlated to the strength of Sterling, but the relationship is not so clear any more. The exchange rate has been fairly stable since 2017, whilst British demand has continued declining, even taking into account the impact of the pandemic.

British demand for Spanish property in the first half of 2021

The Spanish Notaries’ Association also publishes data on sales by nationality, in their case on a half-yearly basis, providing a breakdown between resident (Brits living in Spain) and non-resident buyers, illustrated in the chart below. The latter group are primarily buying holiday-homes.

This data shows that resident British demand is holding its ground, down just 2% compared to 2019, and 6% compared to 2018. But non-resident demand has plunged this year, down 47% compared to 2019, and 56% compared to 2018, and even down 5% compared to last year, when the pandemic was at its most disruptive.

The next chart comparing British and German non-resident demand helps illustrate the decline. The Germans are now in front partly because their demand has increased this year, but mainly because of the collapse in British demand. The Germans are still nowhere near the levels of demand reached by the British as recently as 2018.

The notaries also provide data on spending per nationality. The British still buy a lot compared to others, but they spend less than the average, and significantly less on average than the Swedes, Danes, Germans, and Swiss.

Why is British demand for Spanish property declining?

As we have seen, the decline in British demand comes mostly from the non-resident segment. So what is driving the steep decline in British non-resident demand? Brexit is the obvious answer. ‘Real Brexit’ kicked in at the start of the year, with new limitations of the amount of time Britons can spend in the EU, and some extra inconveniences and costs that come with leaving the EU. It was also inevitable that British demand would start to wane one day, and I expect the downward trend in British market share to continue for the foreseeable future.

That said, the British were still the second biggest group of foreign buyers in Spain in Q3, just not as dominant as they have been in the last two decades. So the decline needs to be kept in perspective.

Furthermore, the overall decline disguises important differences between segments within the British market. People with fewer financial resources and smaller budgets are more likely to drop out when the the going gets tough. At the top end of the market agents report that British demand in upmarket locations like Barcelona, Sitges, Ibiza, Javea, Sitges, and Sotogrande is proving resilient. “In Q3 we saw a 39% increase in UK traffic,” says Muna Benthami, Marketing Director at Lucas Fox International Properties. “We have seen the British share of offers made on properties more than double this year, no doubt helped by vaccinations and easing of restrictions.  We also see the pandemic’s effect on people’s lives rekindling British demand for the lifestyle Spain has to offer.” And according to Celeste Alonso, head of The Property Agent specialising in high-end homes in Sotogrande, “the luxury end of the market is booming, with a lot of demand from foreign buyers including the British looking for large properties and plots in premium areas across the Costa del Sol.” 

2021 Q2

The British market has been losing ground fast in 2021, partly due to ‘real Brexit’ that kicked in at the start of the year.

The British have long been the biggest group of foreign buyers of property in Spain. Back in 2007 they were 43% of the foreign market, and as recently as 2015 they had a market share of close to 25%, according to figures from the Association of Spanish Land Registrars. But in the second quarter of this year that market share dropped to 9.5% (see chart above), just a nose ahead of the Germans on 9.04%. This year the British market share has dropped to its lowest level since records began.

There were 1,296 Spanish home sales involving a British buyer inscribed in the land registry in Q2, just ahead of the Germans on 1,234 acquisitions (see next chart). So British buyers are still the biggest group, but only just. Not long ago they were twice as big as the next biggest group, which at that time was the French.

The next chart shows quarterly UK demand going back to 2014, with the blue columns representing sales (left axis), and the annualised percentage change in red (right axis). You can clearly see the downward trend since 2016 just before the referendum, and the impact of the pandemic since Q2 last year. Annualised sales increased in Q2 this year, but only in comparison to sales during the lockdown period last year.

If you compare the year-on-year change in Q2 with other countries, you can see in the next chart that British demand increased less than all other countries with the exception of China, which was held back by its own unique headwinds. 

Foreign demand from all markets has been impaired by the pandemic, but why is the British market recovering so feebly compared to other countries like France and Germany? 

In the past, the strength of the pound against the euro has influenced demand, with sales rising and falling with the pound and British purchasing power, as you can see from the next chart. Sales lag the exchange rate by a quarter or two, but there is no reason to think the pound, which has been appreciating against the euro in the last year, is to blame for the comparative weakness of British demand this year.

‘Real Brexit’, which kicked in at the start of this year, and limits British freedom of life in the EU, is the obvious explanation. British buyers now face more obstacles than buyers from other European markets like France, Germany, Sweden, Ireland and Belgium. I assume the UK will continue to lose market share in the face of the Brexit headwind for the rest of the year at least.

But Brexit isn’t the only factor. After decades of buying much more property in Spain than any other nationality, perhaps the British have come to the conclusion it just isn’t worth it given the high taxes and transaction costs involved. There are also demographics to consider, and a new tax on second-home owners the UK government introduced a few years back (if I am not wrong about that). The British love affair with Spanish property couldn’t go on forever. It was always bound to sour at some point. 

But despite everything, the British are still the biggest group of foreign buyers, for now. I also bet they are by far the biggest group of sellers, but there is no data on that.

2021 Q1

The latest figures on foreign demand from the Association of Spanish Land Registrars show no sign of an additional collapse in British demand now that ‘real Brexit’ has kicked in.

‘Real Brexit’, with all its restrictions on British citizens in Europe such as the 90/180 day rule, only became a reality on the first of January this year. Up until then we had been living through a type of ‘phoney Brexit’ in the transition period, when it wasn’t even clear what Brexit meant.

The question on my mind was what will ‘real Brexit’ mean for British demand for property in Spain? Will the more onerous conditions of living and visiting Spain hammer British demand or not? Personally, I was expecting to see a significant Brexit-related drop in British demand in the first half of this year.

But with the actual figures in hand, I can see no obvious Brexit-related plunge in the number of Spanish home sales involving British buyers. 

True, the number of sales made to British buyers inscribed in the Land Registry was down 21.4% in the first quarter compared to the same time last year, but so were the numbers for France and German, all thanks to Covid. The British decline in Q1 can also be attributed to the pandemic, because it is more or less in line with the decline in other foreign markets. If the British decline were significantly bigger it would be possible to talk about a Brexit effect, but that’s not the case.

And a few other charts that all show the effects of Brexit and Covid, but no sign of an additional ‘real Brexit’ decline in Q1.

So, no obvious ‘real Brexit’ effect in the figures yet, but it might still be on the way. If there was a small surge in British buyers at the end of last year getting in before the Brexit deadline, that would boost the Q1 figures, delaying the Brexit slump until Q2. If there is going to be a ‘real Brexit’ slump, it will become clear in Q2 and Q3.

Whether or not there is an additional ‘real Brexit’ effect, there is no escaping the fact that Brexit has already taken a big toll since the referendum back in 2016. The next chart shows British demand in Q1 every year back to 2016. This year was almost 50% below 2016, some of that due to Covid, but most of it due to Brexit.

2020 Q2 Part I

 

The UK has long been the biggest foreign market for property in Spain, so how is the British market doing in the light of Covid-19 and Brexit? There’s a lot hanging on the answer, which turns out to be better than I expected. In this two-part report I first look at the latest numbers available, presented in the key charts below, and then share in part II to follow the feedback received from leading estate agents working on the market front-line in the areas most popular with British investors.

So, first the key numbers quantifying British demand in the second quarter.

In Q2 there were 1,003 Spanish homes acquired by British buyers, according to data from the Association of Spanish Land Registrars (charts above and immediately below). The UK is still the biggest national market by a wide margin, almost double the French and German markets combined.

 

British purchases in Q2 were 54% down compared to the same time last year, following on the heels of five quarters of negative growth. The British market was already on the slide before the coronavirus struck, but showed no signs of collapsing in the face of Brexit and the weaker pound. Covid-19 has proved to be much more damaging than Brexit.

 

Most other foreign markets fell by similar amounts, so Covid-19 has not hit the British market harder than others. Even the French market declined more than the British (-56%), which is surprising considering that most French purchases take place in Catalonia, just across the border with France.

 

With the latest numbers in  hand we see that British buyers were 12.3% of the foreign market in Q2, down from 24% in mid-2015, but not far below the long term level of around 14%. Despite all the obstacles that have been thrown in their way, British buyers are still number one in Spain, and there’s no obvious reason to think that will change anytime soon, now that Brexit is already a reality.

 

Finally, a look at sales compared to the strength of Sterling. So long as the pound doesn’t reset significantly below 1.10 EUR/GBP then demand could recover to between 2,000 and 2,500 sales per quarter once the coronavirus crisis is behind us, assuming the bug doesn’t deal a structural blow to British demand for property in Spain.

2020 Q2 Part II

Having looked in part I (section above) at the key charts illustrating British demand for property in Spain in the second quarter, here are comments on the market from leading estate agents in areas popular with British investors.

Estate agents are closest to the market in their area, and although they are vulnerable to the charge of talking up the market, the viewpoint of a savvy agent is the best we have to go on. It’s up to readers to decide how much to discount for bias but personally I think the comments below are offered in good faith.

Costa del Sol Property Market

Smadar Kahana, Engel & Völkers Marbella

Q1 and Q2 have been challenging quarters for us here in Marbella as well as all over the world. However, we have seen a surprising rising demand from clients, especially in the months of April to the end of July that led to fantastic results! In terms of sales, it was the best summer we, at E&V Marbella, had in the last 18 years. In regards to British clients, as Engel & Völkers is specialised in the mid to high-end market, the british demands for this market was always very stable. During these months we had many more inquiries from British clients wanting to relocate with their families and searching for private villas with entertainment space in and outdoors, close to international schools. What we all learned from these challenging times is that much of our work can be done remotely, including online conferences, and I believe that this is also one of the reasons for this higher demand for a permanent home in Marbella. 

Pia Arrieta, DM Properties in Marbella

We have had the same interest from British clients this year as last year, so nothing has changed. Demand has been steady. 

Christopher Clover, Panorama

We see a continuing demand of UK citizens to purchase property here but as expected, a severe interruption factor due to the lockdown which only ended on June 21, thereby making Q2 very low in results, even though the enquiries were at the same level or greater than last year.

As soon as people could travel the market was in fact quite good in the summer, even better than last year, but now that there is a return of Covid there are very few people travelling to Spain which will affect the market for the next months.

So the demand is there, simmering, until there is more freedom of movement, with some purchases happening anyway as Covid-19 has in fact increased the demand for buying properties here.

Daniel Skinner, Right Casa Estates

The British demand in Q1 was definitely recovering, but of course Covid has virtually killed it since then – especially after the ludicrous quarantine brought in.

We are very lucky to be multilingual in our office, because we have sold a lot to the Spanish and Germans this year.

I am hoping there will be a British rush before Brexit, but I don’t see a huge increase in enquiries at the moment.

Many people are looking and waiting for bargains, but the Spanish market takes a long time to respond to demand. 

Sotogrande Property Market

Michael Norton, Open Frontiers

Sales in Sotogrande were surprisingly good at the top end once the travel restrictions were eased, with buyers coming largely from Madrid, but the UK too. Sales in August were as good as any year, though the middle market is struggling. Most of the interest in property for sale in sotogrande has been focused on plots and villas, with low-density being the watchword, which plays in favour of Sotogrande. The market in Sotogrande was much worse in the years after the financial crash, to put things in perspective. People who are interested in Sotogrande know that there has been a very low level of Covid-19 in Cadiz province, where we are, and that also helps boost confidence.

Costa Blanca Property Market

Robin Brayne, HomeEspaña

We’ve had a challenging year, and we expect those challenges to continue well into 2021 as Covid travel restrictions and Brexit combine to sow doubt and delay into the minds of British buyers.

Covid rates remain low in the Costa Blanca, and we speak to eager British customers every day, so the desire to buy here remains strong – but it’s a question of confidence and timing. Murmurings this week that the UK Government might introduce testing at airports to reduce the quarantine period are welcome, but until we see a working, sustainable solution that makes people feel safe to fly, then things will likely remain quiet.

We know safe travel will resume eventually, and there will be clarity on Brexit – and all of this could even happen as early as January, when we’d then expect a small bounceback as pent-up demand is released. But no-one knows if that activity will be sustainable amidst the ongoing economic fallout of Covid and Brexit. Being realistic, we don’t expect the British market to return to pre-Covid levels sustainably until 2022.

In the meantime, we go about our business safely, we keep in touch, we sell to the clients who are prepared to travel, and we carry out remote viewings for as many clients as we can, so they are better informed and prepared for the future. 

Julie Jones, Alta Villas Properties

In Q1 we were very busy with British buyers and vendors and had a good start to the year. Even January was busy, and in February we took reservations for several properties that did not complete until after lock down had ended. About 60% of these were British buyers. We only lost one sale just after lock down ended and that was a direct result of Covid. But we sold the property the next day to an English buyer.

In Q2, we were very busy with English buyers. The ones who bought were local but travel has been difficult for those based in the UK, so we have been doing more video viewings. We sold a property just by video to a British family who are emigrating here and a healthy pipeline of British people planning to come when the quarantine has been lifted.

All of the properties we have sold have outside space – 80% are villas, and in our area, prices have held firm

In terms of sales, we are already at the total we were for the whole of 2019 with 60% of those being to English. About 70% are British vendors.

Costa Brava Property Market

Warwick Pemberton, Costa Brava Fincas

Q1 saw an increase (from Q4 2019) of interest from the British buyer, predominantly due to pent up demand being released from Brexit being (almost) resolved, plus sterling (relatively) stable, and for those looking to purchase in the Costa Brava prior to 31/12/20 when the UK would officially be out of the EU. Plus of course those Brits who love the area and found themselves in a position to purchase.

Q2 needs to be split into two parts: the first part, for obvious reasons, was a complete reversal of Q1, with very little interest from the British. Or indeed any foreign buyer. A disaster for the local property market. The second part of Q2, surprisingly and certainly very welcome, saw a big jump in interest from the British market. Post lockdown, there seemed to be a percentage of Brits with a change of chip, valuing quality of life with a lovely Spanish property and looking to be bold and make the move now rather than later.

And Q3 is a completely different story again…

Barcelona Property Market

Alex Vaughan, Lucas Fox

British buyers are a modest but consistent market for us in Barcelona, and the UK continues to be a source of high-end buyers for us in Catalonia and other parts of Spain. We can see that Brexit reduced British demand for property in Spain, but it also created a new market of British families looking to relocate to Spain as their first choice in Europe after Brexit. We also see Covid creating new demand for properties in Spain that offer outdoor lifestyles in low-density environments. We are confident that British demand will bounce back once we have Brexit and the coronavirus behind us. 

Balearics – Ibiza & Formentera Property Market

Cathy Ouwehand, Let Us Ibiza

After a quieter 2019 with the British wondering about Brexit, Q1 of 2020 started off with a lot of demand from the Uk market, then Covid – 19 hit and everywhere went quiet until travel opened up, with a significant amount of interest from the UK market. Despite the quarantine regulations, we still have UK clients wanting to buy for different reasons, life-style, re-location and Brexit. In total this year 30% of our enquiries came from the Uk market.

Barbara Caprara, Ibiza Sotheby’s International Realty

Spain ended the state of alarm at the end of June, so we were able to return to work from our offices only at the beginning of July.

Given the unfavorable circumstances, with the flights to the islands reduced, and few tourists just beginning to travel after months of confinement, any forecast was very difficult to make in relation to the activity that we would have had.

It was a great surprise to find us with a very active and healthy market, serious clients determined to buy, with great purchasing power and decision-making capacity to close operations in a short space of time. In addition, among the five Balearic Islands, all have had great interest, especially Ibiza and Formentera. The smallest island in the archipelago, Formentera, generated a remarkably great interest of buyers, today more determined to acquire a home than we used to experience before with the main reason being a safe and protected place from the expansion of the pandemic and where people love to spend their free time or in this case even have their home office.

Formentera is going through a generational change, in which properties are being put up for sale after being family properties for many years, so now the market offers a wider variety of possibilities and properties in front of the turquoise sea that characterizes the crystal clear waters of Formentera. 

Lesley Hulme, Astbury Formentera

Great demand.
Never been so busy.
But not from the UK.
Mainly Spanish, French, Belgian
Swiss and German

Balearics – Mallorca Property Market

Engel & Völkers Mallorca group

Although in some areas of Mallorca, German-speaking buyers dominate the market, in the first two quarters of the year we have seen there is still strong demand from British buyers, and many of those have been making quite substantial investments, particularly in Mallorca’s Southwest region, where sales to British buyers have increased this year and almost tripled in sales transaction volume over the same period in 2019.

In the north of the island, which has always been popular with the British, this year Engel & Völkers report that 41% of their buyers were British (40% were German) and the average value of sales made to British clients was just under 1 million euros. In the first 2 quarters of 2020, there was a good level of internet enquiries from British buyers, so interest and demand are still there.

In the west, which is also traditionally very popular with British buyers, the split between sales to British and German clients is around 50/50 in the first 2 quarters of this year. In terms of online requests, the British market is the second largest group (and is fractionally behind the German-speaking group).

In the centre of the island, Engel & Völkers reports a 9% increase in internet requests by UK clients this year compared to 2019. 

Canary Islands – Fuerteventura Property Market

John Goldacre, Goldacre Estates

January and February opened really well, and we were in line with our budgeted objectives for both months exceeding our expectations , these months are always very buoyant in the Canary Islands real estate market.

The price range was across the board from people looking for their apartments as holiday homes to buyers looking to relocate for full time living. Prices ranges for January and February were between 100,000 euros to our most expensive sale at 750,000 euros .

March and April for us took a big slide in the opposite direction with March only achieving 30% of our budgeted objectives and April zero, due to lockdown.

We had a core of people working from home during the lockdown, and the enquiry levels remained strong, but with no flights coming in to the island our clients were kept away.

We used this time for planning regarding staffing and overall finances to reduce our cost base as low as possible because nobody knows where this was going and for how long. But at no time did we see any panic from our vendors, and nobody was rushing to reduce their selling prices.

In Q2 the interest from foreign buyers remained high with enquiry levels strong, and the price ranges of enquires actually increased to the more expensive levels of property values, with clients focus shifting to more lifestyle changes / permanent moves, Fuerteventura and the Canary Islands in general are seen as a safe haven regarding COVID with Fuerteventura recording only 45 cases total. Brexit was also a driver of British interest in living in the EU.

The big surprise for us as we came out of lockdown was the shift in the local market with a surge of interest from local buyers who had spent lockdown in small apartments looking to upgrade to properties with more outside space so these were our first sales after lockdown. June saw the first shoots of the resurgence in the market in terms of physical buyers on the ground, followed by our UK clients who were on the first planes out they could catch.

In Q3 with confidence coming back in terms of travel, July and August were our best months for many years, August traditionally is a quieter month for the Canary Islands real estate market because of school holidays etc but this year has exceeded all our budgeted expectations and historic results.

There has been a pent up demand with buyers wanting to move quickly to secure their purchases and get everything in place pre Brexit .

Sales have taken many forms with some clients from the UK buying on the basis of video and live online presentations, and it has been amazing to see the level of trust. Some of these sales have already been completed. Everything has been arranged for the clients without them having to visit.

July and August saw GoldAcre Estates achieving 200% of our objectives.

The Canary Islands market is robust and although volumes are generally lower because of flight restrictions being imposed today including quarantine, I see the market continuing to move forward because of the uniqueness of Fuerteventura and the safety it affords in terms of low density of population, the environment, and the year round good weather .

2019 Q3

The British have long been the biggest group of foreign buyers of property in Spain, and are key to the fortunes of the second-home market on the Spanish costas. These charts will help you understand the current state of British demand, which has been sent into a spin by Brexit, just like everything else.

There were 2,193 home sales involving British buyers registered in the Spanish Land Register in the third quarter of the year, according to the latest report from Spain’s Association of Land Registrars. You can see quarterly purchases by British buyers in the chart above.

The number of British buyers in Spain was the lowest it has been in the third quarter since 2014, but is still significantly higher than it was in the crisis years between 2009 and 2013, as you can see from the following chart, based on half-year figures from the Association of Spanish Notaries.

Looking at the year-on-year change in British demand there were 16% fewer buyers in Q3, following on a 17% decline in Q2. Whereas demand increased steadily between 2010 and the Brexit referendum in 2016, since then the British demand curve has been up and down on a shorter wavelength, rising and falling in shorter periods as illustrated by the next two charts, the first one quarterly from the registrars, and the second half yearly from the notaries.

UK market share of foreign property demand

Although the number of British buyers declined in Q3, the UK market share of the foreign market actually increased from 13% to 14%, because overall foreign demand fell more. As things stand the British are still the biggest group of foreign buyers by a long stretch, and continue to be vital to the second-home market on the Spanish costas.

The strength of the Pound is one of the key drivers of British demand, as a strong Pound increases the spending power of British buyers in Spain. British demand clearly rose with a strong Pound up to the Brexit referendum, but then didn’t fall as much as I expected when the Pound crashed towards parity after the referendum.

The Pound is currently the strongest it has been in almost three years on hopes of a Conservative majority in the pending General Election, and an orderly exit from the EU. But the pound is still much weaker than it was before the referendum, and there’s no reason to think the current exchange rate with the Euro will boost British demand for property in Spain.

Insight from the market front line

British demand is on the slide overall, but the requirements of buyers are also changing. “We have seen UK interest in Q3 decrease in general, but the decline was most acute in some segments like detached houses under €500,000, which had a dismal quarter,” explains Conor Wilde, boss of Found Valencia, one of the leading real estate companies in the Valencian region. “On the other hand we have seen a slight increase in UK demand for Valencia city apartments under €500,000. People are just moving on with their plans while this Brexit plays out. We are also seeing an increase in interest in buyers from the UK looking for the Spanish Golden Visa. Some of them are already buying, whilst a considerable number are waiting to see the Brexit outcome.”

Where is British demand for Spanish property heading?

When trying to understand where the market is heading I like to think in terms of headwinds and tailwinds that lift or hold back the market. I recently did a headwinds/tailwinds analysis on foreign demand in general, which also applies to British demand. But every market has its individual factors, and in the UK the outcome of the General Election next Thursday could have a big impact on demand for property in Spain.

With a choice between bonking Boris and Comrade Corbyn on the ballot I can see how a Conservative victory would be better for the economy, and might increase demand from Remainers looking to stay in Europe as individuals, if not as a country, perhaps taking advantage of the Spanish Golden Visa budget permitting. On the other hand a result that puts Corbyn in number 10 would see Marxists in power for the first time in British history, which I would expect to be bad news for the British economy and UK spending power in Spain. That might lead to capital flight, and perhaps an increase in the number of people deciding to leave what they see as a sinking ship. So both results might increase British demand for Spanish property for different reasons though, on balance, I would expect a Conservative victory to be better for the Spanish property market than a Labour victory. Let’s see what next Thursday brings.

2019 Q2

British demand for property in Spain is on the slide again despite recovering in 2018 from a post Brexit vote slump in 2017. 

The chart above illustrates the slump in demand around the Brexit referendum in late 2016 and the first three quarters of 2017, after years of strong growth. But surprisingly, British demand bounced back in 2018 with no other explanation other than Brexit fatigue. People may just have had enough of waiting for Brexit and got on with their lives and plans. Why the decline in 2019?  There’s nothing particularly British about it – most foreign markets show the same trend (next chart), suggesting that Spanish property is getting less attractive to foreign investors, perhaps because prices are higher and Spanish property is no longer the obvious bargain that it was.

As a result of the 17% decline in Q2, British demand has fallen to 13% of the foreign market (next chart), the lowest level since the registrars starting publishing figures for foreign demand broken down by nationality.

One factor that obviously influence British demand is the Pound-Euro exchange rate. The chart below shows a rough correlation between the two, with British demand rising with a strong Pound, and falling with a weak one, with a lag of one or two quarters. The Pound was trading as low as 1.08 in August, and was near or below 1.1 for most of Q3 to date, notwithstanding a recent rise to around 1.13 on hopes of an exit deal. If a weak Pound is a leading indicator of declining British demand for Spanish property, then we can expect the numbers to go down even more in Q3.

Though less dominant than they were, the British are still by far the biggest group of foreign nationals buying property in Spain, with 2,159 purchases recorded in Q2, a full 74% higher than the next biggest group – the French – as you can see from the following chart. So British demand might be falling, but it is still big compared to other countries.

Interestingly, according to Conor Wilde, boss of Found Valencia, an estate agency based in Valencia City, the number of British buyers looking for Spanish Golden Visa investments surged in Q2. “We’ve seen an increase in enquiries from the UK looking for country houses from €500,000 to €600,000 with a Golden Visa in mind,” explains Wilde. “We’ve also seen quite a lift in Golden Visa enquiries for city apartments,” so it looks like Brexit is creating a new segment of British clients who will join the Chinese, Russians, and buyers from the Gulf looking for an EU Golden Visa to allow them to move around freely in Europe. Note that the Spanish Golden Visa scheme is retroactive, so anyone who has spent €500,000 or more of their own funds on Spanish property can apply for a Golden Visa after Brexit if it becomes necessary, which I don’t think it will.

But Brexit is not only creating a new segment of British buyers interested in the Spanish Golden Visa scheme, it’s also encouraging an increasing number of British owners to bring forward their decision to sell up and leave Spain. “The big trend I see is a lot of UK people living here are selling,” says Wilde. “People are scared, they are worried, and they are just fed up with the Brexit nonsense at this stage.” Brexit, and a good exchange rate with the Pound near historical lows, mean that British vendors are probably quite motivated right now, and more likely than other vendors to give ground to do a deal.

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