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Are Overseas Buyers still buying? New figures suggest the answer is yes
Overseas buyers in 2021
Are overseas buyers in 2022 still heading for Spain? According to recent statistics from the notaries the answer seems to be yesand in increasing numbers. For the three years prior to the appearance of Covid-19, 2017-2019, the overseas property market in Spain was at an all-time high. In each of those three years the number of overseas buyers had topped 100,000. That barrier was broken in 2017 (100,116), the all-time record was in 2018 (103,677) followed by a slight dip in 2019 to 102,264. However, the 2nd half of 2019 was the best on record at 50,534 so everything was looking good for 2020. Then Covid-19 arrived
The Missing Overseas Buyers in 2020
The full-year 2020 statistics showed a total of 77,496 overseas buyers. If we take an average count of overseas buyers in the three years before the pandemic arrived it shows that about 25,000 foreigners who could reasonably have been expected to buy in 2020 didn’t. And with the statistics from the notaries for just the 1st half of 2021 we can estimate about 30,000 overseas buyers went missing between March 2020 – June 2021, covering the period when lockdowns and travel restrictions were at their peak. However, the 1st half 2021 statistics indicated that overseas buyer numbers were bouncing back strongly. If we take the average 1st half figures for the three years prior to the pandemic we see that the 2021 comparable of 47,683 was down only 8%.
The Big Surge?
That was the question for the 2nd half statistics – would there be a surge of buyers, some of those missing 30,000 added to normal demand levels? When I wrote my annual Spanish Property Market Report earlier this year I predicted there would be something of an increase but I certainly wasn’t expecting the numbers we now have. The recently released statistics from the notaries show that 2021 beat the previous all-time high in 2018, and by quite a margin. In the end, in spite of Covid disruption the overseas sector of the property market in Spain hit a new record of 111,743 buyers in one year.
Spain’s Property Market Needs Overseas Buyers
It’s also interesting to note how the overseas sector of Spain’s property market has grown since the 2008 meltdown. For example, the 63,934 figure in the 2nd half of 2021 was above the whole year total of 57,674 in 2007, the last year before the 2008 market meltdown. And since numbers started to grow again in 2012, every year has been up on the previous year until Covid-19 arrived. In fact, the overseas sector of Spain’s property market is now about 96% bigger than it was just before the 2008 collapse.
In contrast, the domestic market has experienced a much slower recovery over the same period and is still 25% smaller than it was in 2007.
Not Just Numbers – It’s Money As Well
As well as the number of overseas buyers in Spain there’s another reason they are important in the property market. They spend more. Typically, foreign buyers pay more per square metre than the national average. For example, the average spend by a foreign buyer in 2021 was €1,939 per m2, almost 30% higher than the national average of €1,503. In the more expensive locations where foreigners buy in large numbers the difference is even more noticeable. In the Balearics the average per m2 spent by foreigners in 2021 was €3,688 per square metre, more than double the national average.
So it’s encouraging that these latest statistics show this trend is continuing. Anyone involved in the property market in the overseas property hotspots has seen prices rising during 2021 and now we have the proof. If we define the overseas market hotspots as the mainland Mediterranean coasts plus the Balearic and Canary Islands the average price per m2 paid by foreigners in 2021 rose in all of them. Andalucía experienced the highest year-on-year rise in prices per square metre, up 11.5%. followed by the Balearics, up 10.1%.
Catch Up Plus New Demand
However, these latest statistics for 2021 don’t tell us how many of the 111,743 overseas buyers during the year were some of the missing 30,000 and how many were new to the market. Certainly the market feels very busy with a lot of people entering the market at the same time. Some will be playing catch-up from the lockdown and travel restricted periods. But for that they would have been part of 2020 statistics. Now they have shown up in the 2021 figures together with normal new demand. This is definitely creating a supply-side problem, above all in the quality, prime location resale sector.
The 2021 statistics from the notaries seem to indicate that about 10,000 extra buyers entered the market in 2021, over and above what normal demand would have produced in the best pre-Covid years. If that leaves another 20,000 of the missing 30,000 still to come then I see the supply-side deficit we are currently experiencing continuing for some time to come. Inevitably, this will put further upward pressure on prices for the foreseeably future. On the positive side we may see higher prices tempting more sellers into the marketplace.
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