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Relax… while we unscramble the 2020 statistics

Overseas Property Market in 2020

graph to show up and down arrows Given that the overseas property market in Spain is totally dependant on people being able to enter the country 2020 had the potential to be a disaster. The statistics relating to foreign buyers are compiled twice-yearly, the first half in November of the same year but we always have to wait until May of the following year to see the full picture. We now have the data for the second half of 2020 and although there were falls across the board it wasn’t nearly as bad as many were predicting.  I don’t think these statistics are helpful for spotting trends as they usually are.  But I do think they show the overseas sector of Spain’s property market in a position to recover quickly from the pandemic.  I would even go so far as to predict records being broken within a couple of years.

Where the numbers come from

The Notaries compile the figures half-yearly by nationality, regions and price per square metre and the Ministry of Development do the breakdown quarterly by municipalities. By combining the two sets of data you can get a comprehensive view of what happened over the year. I ignore the Property Registries’ figures as they count when a property is inscribed in the registry which may be weeks or even months after it completed in front of a notary.

Before the Pandemic

Spain’s first lockdown started on March 14th, 2020 so Q1 was always going to look relatively normal and indeed, those figures showed Spain was on track for a pretty good year as regards overseas buyers. Once lockdown started Notaries were only allowed to oversee emergency work for several weeks. Unfortunately, property completions weren’t categorised as emergencies. Inevitably, this delayed completions of purchases already agreed before lockdown, some not finalising until December.  In addition, mortgage applications got bogged down as well.

However, at the end of Q1 we had no idea how bad it was going to get. By the time notaries reopened for all business, travel restrictions were in place to and from many countries. As a result, April to December 2020 was not going to look normal.

Overseas Buyers in 2020

As I’ve already pointed out, Spain’s overseas property market relies totally on freedom to travel but that was impossible, or severely restricted for most of 2020. And it wasn’t just that potential buyers couldn’t get to Spain. Even if they were already there, provincial borders were closed at times, as were borders between municipalities. In the event, I’m surprised by just how good the full-year statistics are.

We now have the 2020 figures to show where we are starting from as travel restrictions loosen ,giving Spain’s overseas property market the chance to recover. Overall, there were 80,106 fewer property transactions across the whole of Spain than in 2019. In terms of the foreign market there were 24,772 fewer buyers over the same period. This means the property market is back at 2015 levels in terms of both domestic and overseas purchasers. In other words, five years of growth disappeared between April and December 2020.

Overall, Spain’s total property market fell from 550,855 transactions in 2019 to 470,749 in 2020, a drop of 14.5%.  Meanwhile, the overseas sector was down from 2019’s 102,264 to 77,492, a fall of 24.2%.  However, overseas market share held up well, falling from the average of 18.7% between 2012 and 2019 to 16.5%.

The Importance of the Overseas Market

The health of the overseas sector really does have an impact on the overall property market in Spain for several reasons. It’s not just the actual numbers, but also market share and spending power.  One of the most striking features of the overseas sector during Spain’s long post-2008 recession was how little it was affected by what was going on during the domestic economic meltdown. Indeed, foreign buyers drove the initial recovery of the property market, buying in record numbers and increasing market share from Q1 of 2012, with all-time records being set in 2018, with 103,673 foreign buyers, taking 19% market share. In contrast, the domestic market continued to slide until Q4 of 2014. I suspect overseas buyers are going to be just as important in the post-Covid recovery as they were post-2008.

Market Share

At the peak of the property boom before the 2008 crash, foreign buyers never had more than 8% market share.  However, this rose to an average 18.7% share of the overall market between 2012 and 2019. The final 2020 figures show that even with the disruption caused by Covid-19 foreign buyer market share fell only slightly, to 16.5%. As a result, the overseas sector is still twice as large as it was in 2008 in terms of market share and I predict it will recover strongly to new record levels. Of the total 470,749 property transactions recorded by the Notaries across Spain in 2020, 77,492 were attributed to foreigners.

The Foreign Buyer Hot-Spots

However, it’s when when you look at the Mediterranean coastal regions and the islands where the majority of foreigners buy that the importance of this sector really shows up. In 2020 the foreign element was 30% in the Canary Islands and 35% in the Balearics.  On the mainland, 30% of buyers in the Comunidad Valenciana were from overseas while in Murcia it was 25%. 

In contrast, the figure for Andalucía was 16%, just about the same as the national average.  However, that changes dramatically when you analyse by province and take a look at Málaga. Here, foreigners accounted for 28% of 2020 transactions. If the other provinces in Andalucía with Mediterranean coastline, that is, Almería, Granada and Cádiz are added to the mix, 70% of Andalucía’s foreign buyers bought in just these four provinces. At the other end of the scale in Jaén, buyers from overseas made up just 4.5% of the overall market. 

And the same dominance of overseas buyers is clearly shown in the figures for the Comunidad Valenciana, which includes the Alicante and Valencia provinces.  These two provinces accounted for  90% of all foreign buyers in the region. (Source: Mo de Fomento)

Lower numbers but higher spend

And it’s not just the numbers that make foreign buyers so important to the Spanish property market.  They spend more too.  On average an overseas buyer spent €1,777 per square metre while the average spent by Spanish buyers in 2020 was €1,439 pm2. The difference would have been much greater but was reduced by the 7,526 Moroccan buyers whose average spend was only €635 per square metre. 

In addition, the spending power of foreign buyers is further underlined when you look by nationality.  For example, Swedish nationals spent €2,530 per square metre. They were 2020’s big spenders, taking over from US buyers, the previous year’s winners.  They dropped to third place with an average spend of €2,268 pm2 while the Germans held on to second place (€2,433). 

Hoever, the per square metre price paid by foreigners was even higher in the overseas sector hotspots. For example, in the Balearics the average paid by an overseas buyer in 2020 was €3,353 per m2, €2,023 in Cataluña, €1,804 in Andalucía and €1,877 in the Canaries.  Nevertheless, in two Mediterranean coastal regions it was lower than the domestic average; €1,360 pm2 in the Comunidad Valenciana and just €985 pm2 in Murcia.

Nationality League Table

The 2020 league table of buyers by nationality had a familiar look to it.  In spite of Brexit and a rubbish exchange rate, the British, as ever, were the most numerous with a total of 9,783 purchases.  That represented 12.6% of the total foreign market, only slightly down from 13% in 2019. However, they bought 79% of the total for German and French purchases combined.  And  British, French and German buyers account for 29% of the whole overseas market.

In addition, when. you consider the regions most popular with foreign buyers the British took a much bigger share of the overseas market.  For example, 25% of foreign buyers in Andalucía were British, and over 50% in both Murcia and the Comunidad Valenciana.

What’s Next?

Throughout 2020 and early 2021 I have been surprised by just how well demand is holding up. In fact, enquiries for our property finding service have been running well ahead of 2019, to the extent that I think there is a pent-up demand just waiting to get going.  Although I’ve no doubt that some buyers have either put their plans on hold or abandoned them altogether others are bringing them forward.  It’s almost as though the pandemic has focused their minds on future plans and there seems to be a ‘let’s get on with it attitude, why wait’.  And there’s no doubt in my mind that with the ‘work from home’ option becoming a reality for many more people post-Covid, that home will be in Spain.

For an insight into other issues affecting the Spanish Property market and overseas buyers take a look at our Spanish Property Market Report.

For more details about the locations we cover:

Andalucía, Barcelona, Canary Islands, Costa Blanca and Mallorca

From the Blog

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