Overseas Property Market in Spain
From the perspective of the overseas property market in Spain I find the most interesting statistics are from the College of Notaries. These break down purchases by nationality and region and are published half-yearly. The most reliable statistics about the Spanish property market are always those produced by the Notaries. This is because they record when a purchase was actually completed, the day everyone sits in front of the notary and money and keys change hands. So, when you see a monthly, quarterly or annual figure you know it refers to what really happened in that timeframe.
In contrast, the Property Registry statistics count the properties registered in a particular month, quarter or year without stating when the purchase occurred. Properties registered in a January will, for the most part, be purchases completed in December or even November of the previous year. It can be confusing. When the Notaries announced the returns for the first half of 2018 the count was 285,822 purchases. In contrast, the Registries announced a total of 236,524 in the same period, a discrepancy of about 19%. The difference occurs because Notaries count a deal done and Registries count inscriptions, weeks or even months later.
The Important Numbers
As far as the overseas property market in Spain is concerned the Notaries’ returns show a total of 53,359 foreign buyers in the year to June. That’s an increase of 5.6% compared with the same period in 2017 and an 18.7% share of the total market. This means that last year’s all time record of 100,116 foreign buyers is on target to be bettered. Just how important international buyers are for the property market in Spain is underlined by that fact that this sector is already more than 20% larger than it was at the pre-crash peak in 2006. In contrast, the Spanish domestic sector is approximately 50% smaller.
The variation between the autonomous regions is striking. Way out in front is the Comunidad Valencia with 15,613 foreign buyers, up 16.7%. Andalucía is in 2nd place up 8.2% with 9,737. In contrast, regions not located in the Mediterranean hotspots don’t fare so well. Cantabria welcomed just 145 buyers from overseas in this period while Extremadura was the lowest with 144.
However, two leading Mediterranean destinations registered fewer overseas buyers than during the same period in 2017. Cataluña’s total of 7,570 foreign buyers was down 5.3% while the Balearics suffered an 11.2% decrease with 3,173 overseas purchasers. I think Cataluña’s political turmoil following the Independence referendum in October 2017 is one reason for the decrease. In addition, given the importance Barcelona, tighter control of tourist rentals may be deterring buy-to-let investors and occasional renters. I discussed these restrictions in a blog here.
The decline in the Balearics is a bit more puzzling. One reason might be high prices fuelled by lack of supply. In the first half of 2018 overseas buyers in the Balearics paid an average €2,790 per square metre. That’s more than double the price paid in the Comunidad Valenciana (€1,304 pm2) and 65% more than in Andalucía (€1,655). And it’s the highest in Spain. Also, given that Mallorca is the main market of the Balearics, the tougher short term rental restrictions now operating there may deter buyers who want rental income to cover running costs.
The Brits Still in the Lead
These notarial returns also tell us who heads up the nationality league table. As ever, it’s the Brits. In spite of Brexit turmoil and an exchange rate between €1.12 and €1.13 in the January to June period the British market is holding up extremely well. Compared with the first half of 2017 British buyers increased by 8.8% to 7,613, well ahead of the French who were in 2nd place with 4,211 and 3rd place Germans on 4,138. And the British represented 14.8% of all foreign buyers. In some regions the British market share was even higher. In Andalucía 28% of foreign buyers were British, 23% in the Comunidad Valenciana and an astonishing 57% in Murcia.
Typically, second half-year purchases by international buyers are broadly in line with the first half. As a consequence, doubling up on the first half totals is a good guide to the full year results. Based on these latest notarial returns I predict international buyers for the full year will be another record. And I’m confident the British will still head the nationality league table by some margin. They have for the last fifty years and it seems even Brexit won’t change that. Once the Brexit dust has settled British buyers will still be the most important group for the overseas property market in Spain.
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