What do the 2018 overseas buyer numbers mean?
As the second half of 2018 progressed it certainly felt as though the overseas buyer sector of the Spanish property market was slowing down. But as we have to wait until the end of Q2 of the following year to get the notaries’ statistics there’s no way to know for sure. We now have those figures and the feeling was right – the second half of 2018 did slow down compared with the first half. However, confounding the pessimists, the British were one of the few nationalities that actually rose in the second half. And, in spite of slowing down, the good news is that the full-year total was still an all-time record for foreign buyers.
The overall property market in Spain rose 9.7% in 2018, a total of 562,900 transactions. Of these 103,673 were attributed to overseas buyers, an increase of 3.56%. An interesting point about these numbers is the fact that the overall market is still about 30% smaller than it was at the pre-2008 peak while the overseas sector is already 30% larger than it was. So, perhaps a brief lull in growth is not surprising. British buyers were up 7.5%, more than double the growth of the international sector as a whole. Meanwhile, the French market was down -3.2% and Germans -6.5%. About 67% of the foreign market is made up of E.U. citizens.
Who are the international buyers?
In 2018 in spite of Brexit and the weak £ the British still performed better than other nationalities, buying 15,305 properties,14.76% of the overseas market. That’s nearly double the number bought by the French in second place (8,242) and more than twice as many as third place Germans (7,913). Once again the Brits are firmly in top spot in the international buyer’s league table. They always have been and I suspect they always will be, Brexit or no Brexit.
Where are they buying?
About 65% of all purchases in Spain in 2028 occurred in the Mediterranean coastal regions and the Canary and Balearic islands. If Madrid is added to the mix that rises to 70% so it’s clear that activity is concentrated in just a few regions, with not much going on in the rest of Spain.
In order of preference the four most popular regions for overseas buyers are:
- The Comunidad Valenciana (Castellón, Alicante & Valencia): 30,211, up 9.53%
- Andalucía: 18,918, up 6.25%
- Cataluña: 15,186, down 1.26%
- The Canary Islands: 9,248, down 12.66%
None of the four regions listed above showed any growth in overseas buyers between June and December 2018, confirming that the second half year was indeed weaker than the first half, during which all four regions had shown growth compared with 2017.
Ups and Downs
A good example of the unevenness of the property market is Andalucía, where nearly 1 in 5 of all property transactions in Spain occur. The 2018 figure was 109,287, 19.41% of Spain’s annual total, and of those 17,052 were foreigners. At 15.6% market share that’s actually slightly below the national average of 18.2%. However, when you look at variations within the region it’s a different story.
Andalucía is Spain’s largest autonomous region made up of eight provinces. In 2018, 31,355 or 29%, of all purchases occurred in just one of those eight provinces province: Málaga. Compare that with the much larger province of Jaén which could only manage 5,279. In terms of foreign buyers the Málaga total was 10,790, a 35% market share and way above the national average. And whereas British buyers are 14.76% of foreign buyers across Spain in Andalucía they are 33% of the overseas sector. In Jaén province there were just 163 foreign buyers in 2018.
The unevenness of the market is also apparent within a province. In Málaga province 37.48% of the total 31,355 transactions occurred in just two locations: Málaga city itself and Marbella. Add Estepona into the mix and that rises to 43.78% of the total provincial market. It’s clear that most activity at the national, regional and provincial levels is happening is just a handful of locations and that activity in areas without significant foreign investment lags way behind.
Another example of market unevenness can be seen in Cataluña where the total number of purchases in 2018 was 89,085. However, of these 67% (60,448) occurred just in Barcelona. For the foreign investor an interesting statistic is the share of the market for foreigners was only 11.63%, well below the national average. Perhaps this is a sign of nervousness among foreign investors since the Catalan independence issue hit the headlines.
In conclusion, the overseas sector of the Spanish property market had a good 2018. An all-time record number of foreign buyers and no sign of a fall-off in interest from its most important market, the British. In 2015, the last full year before the referendum, there were 15,858 British buyers. That fell to 15,058 in 2016 as a post-referendum decline in the second half year wiped out the increase in the first half. However, numbers started to grow again in first half of 2017 and have increased each half year since then.
I said at the start of this blog that there was a feeling that the market slowed in the second half of 2018. So the question is, why might the market be slowing? In my view there can only be one reason and that’s prices rising too fast, particularly in the new-build sector. This has spilled over into the resale part of the market as vendors get overexcited. All I see hitting my inbox right now are price reductions.
Broadly speaking, prices are still well below the top-of-the-market levels in 2007. For example, in Andalucía in 2018 the average price per square metre paid by foreign buyers was €1,705 against €1,993 pm2 in 2007, 15% less. In the Comunidad Valenciana prices per square metre at the end of 2018 were 16.4% below 2007 levels and in Cataluña 25% lower. This means there are still good deals to be done and buyers must beware of overpaying, above all if they going after new-build.
Please check our blog page for more posts about changes to Spain’s rental laws for owners and lots of other topics. Get the answers to some commonly asked questions about buying property in Spain on our FAQs page.