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.

This report seeks to shed light on the profile of non-resident, non-EU buyers and their role in Spain’s property market. It presents the key data available to analyse this segment and scrutinise the government’s argument. The government claims that 27,000 homes were purchased by this segment in 2023, but how reliable is this figure? Moreover, how significant is the influence of this segment on the Spanish housing market, particularly in regions most affected by affordability challenges? Understanding the reality of this segment is essential for evaluating the fairness and effectiveness of this unprecedented policy.

Buyers from outside the EU: impact on the Spanish housing market

On Monday the 13th of January 2025 Spain’s Socialist PM Pedro Sánchez announced his government’s plan to deter non-resident buyers from outside the EU by slapping them with punitive taxes of up to 100% of the property price, arguing that this segment of the market is made up of speculators who are driving up housing costs for locals. On Sunday the 19th of January at a Socialist Party rally in Extremadura he went a step further and suggested banning them from the market entirely.

Size and relevance of the segment

To assess the role of non-EU buyers in the housing market, it is crucial to examine their size relative to the overall market.

Fig.1 shows that non-resident buyers from outside the EU purchased 18,648 homes in Spain in 2023, a 7% year-on-year decline (based on figures from the Spanish notaries’ association). Over the past decade, this segment’s level of investment has been shrinking slowly, with 2023 marking one of the lowest volumes outside the pandemic years. A declining growth pattern does not support the government’s claim that this segment is exacerbating the housing crisis. In fact, it appears to be losing relevance.

Non-EU non-resident property buyers in Spain

The Spanish Government’s assertion that “around 27,000” homes were purchased by this segment in 2023 contrasts with the notary’s figure of 18,648 shown above. 27,000 would be 49% of all foreign non-residents buying in Spain according to the government’s own figures (54,917 in 2023), which is hard to reconcile with data from the notaries based on sales witnessed by them showing that just 32% of foreign non-resident buyers came from outside the EU.

Contribution to the foreign market

In 2023, this segment (non-residents from outside the EU) represented just 14% of the total foreign buyer market, a decline from its 25% share in 2014-2015 (Fig.2). The total foreign market, which is dominated by EU expats and second-home buyers from countries like France and Germany, has grown much faster than this segment. Given its declining share, this segment is unlikely to be a primary driver of the housing crisis. Targeting this segment with punitive taxation or banning it outright raises questions about the policy’s rationale, especially when its market share has diminished significantly in recent years.

Overall market impact

When considering the broader market, this segment’s influence is even smaller. In 2023, there were 623,000 home sales in Spain, giving this group a market share of just 2.99% (Fig.3). It is the smallest segment of the housing market, making it unlikely to have a significant impact on housing costs for locals.

how important are foreigners to the Spanish housing market?

Nationalities and purchase patterns

The first half-year data for 2024 from the notaries provides the latest insights into the nationalities within this segment. Of the 9,166 sales recorded, British non-residents accounted for 3,480 transactions, making them the dominant nationality with a market share of 37.9% within this segment. The USA was the second-largest nationality, with 695 sales (Fig.4 and Fig.5). These figures suggest that only the British buyers are significant enough to potentially influence local markets if concentrated in specific areas.

the british are number one in the non-resident non-eu market

Nationalities such as Russians (414 sales in H1 2024) and Chinese (257 sales), are too small, and spread to thin, to have any meaningful impact on housing prices. Even the “other” group, encompassing buyers from more than 150 countries, most likely comprises immigrants from developing nations who do not yet have residency papers, seeking homes for personal use not speculative investments.

Regional distribution of purchases

Data on regional preferences shows that British buyers concentrate in coastal regions like the Costa del Sol, Costa Blanca, and Murcia. These areas are characterised by urbanisations catering to international buyers and do not typically overlap with regions experiencing severe housing shortages. For instance, some figures show that 90% of British buyers focus on Alicante, Malaga, Murcia, the Balearics, the Canaries, and Almeria. While some of these regions (Balearics and Canaries) face housing challenges, the number of non-resident British buyers in them is too small to move the needle , and their purchases tend to involve villas or second homes on the coast, not affordable housing stock in the city.

Spending patterns

The spending habits of this group are highly varied, reflecting its diversity. Fig.6 shows a wide range of budgets within the segment (segment countries in black), from high-end properties to more affordable homes. This variety further undermines the government’s narrative of a homogenous group motivated by a desire to speculate. Instead, many buyers are seeking holiday homes or planning to relocate when residency permits allow.

how much do foreigners spend on property in spain?

Conclusion

The data shows that non-resident buyers from outside the EU play a minor role in the Spanish housing market. Their market share is small and declining, and they focus on the Costas, well away from areas experiencing the housing crisis. The government’s portrayal of this group as speculators who are driving up housing costs for locals in affordability hotspots is not supported by the evidence. Punitive taxation or an outright ban targeting this segment appears disproportionate and misaligned with the realities of the market, raising questions about its effectiveness and fairness.