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The Notaries Report – Overseas Buyers 2019

Overseas buyers 2019 hotspots in SpainThe Notaries produce the most reliable property market statistics. They count when a transaction actually happens, the date on which a purchase completes.  On the other hand, the figures from the Property Registries reflect when that same purchase is inscribed in the registry.  And that may be weeks, or even months, later.  A purchase completed in a November or December may not make it into the registry until the following year.  Consequently, Q1 and Q4 totals can be very distorted.  In addition, Q2 and Q3 can be affected by delays over the summer holidays.  So, for an accurate count of how many foreigners bought in Spain in 2019 we need to look at the Notaries.

Overseas Buyers 2019

In normal years the statistic I most look forward to is the Notarial return giving the total number of overseas buyers in Spain in the previous year.  These are broken down by region, nationality and spend. The figures are released in two stages. Initially  we get  the first half-year in November of the actual year. However, we wait until May of the following year for the second half.  Until then you can’t assess the full-year, was it up or down, who was buying and who wasn’t, were they spending more or less than previously.  All this data tells us how the market is actually doing, what the trends are.

And this year was going to be particularly interesting. This was because the 2019 first half-year figure indicated a slowdown in the overseas market. For the first time since the market recovery got going in 2014 the number of buyers from overseas declined. And then the coronavirus arrived.  Nevertheless, I’m analysing the stats as I normally would although I suspect they’re the last that will have any meaning for quite some time.

What actually happened

In the event, there were 1,425 fewer foreign buyers in 2019 compared with 2018, a fall of 1.39%. However, the -3.2% fall in the first half that so worried everyone was not replicated in the second half. On the contrary, it rose slightly by 0.5% year-on-year. In the end, the total for the year was 102,252, the second best figure on record.  Therefore, I’m inclined to think we were seeing a blip after five years of continuous growth, rather than the start of a serious market correction.  

However, the domestic market also declined in 2019 and by a bigger margin, down 2.71%.  However, this sector has performed very differently since the 2008 crash.  From 824,905 purchases in 2006, it went off a cliff to a low in 2013 of 247,208, a fall of 70%.  By this time, however, the overseas market was already two years into recovery.  In addition, the domestic market is still about 40% smaller than it was in 2007 while the overseas sector is 77% larger.

Overseas Buyers – Where?

The top destinations in Spain for overseas buyers are Andalucía, Cataluña, Murcia and the Comunidad Valenciana (comprising Castellón, Alicante and Valencia provinces) on the mainland, plus the Canary and Balearic Islands.  Together, they account for 63% of the overseas market and 14% of the total Spanish property market.  In addition, several have overseas buyer market share way above the national average of 18.7%. For example, 37.1% of buyers in the Balearics were foreign, 34% in the Comunidad Valenciana, 30.2% in the Canaries and 29% in Murcia.  Nevertheless, 4 regions saw a fall in the number of overseas buyers in 2019; -2.65% in Andalucía, -3.59% in the Comunidad Valenciana, -6.98% in the Balearics and -15.6% in the Canaries.  Murcia saw a 5.07% increase while Cataluña saw 6.24% more.  

This suggests the political instability in Cataluña is not having a long-lasting effect and the losses of 2018 have been recovered.  The big fall in the Canary Islands may be explained by the weakness of the GBP£ as the Brits make up more than 30% of all foreign buyers.  However, that is also true in Andalucía and the fall there was more modest.  

The decline in the Balearics is a bit more puzzling. One reason might be prices.  Foreigners paid an average €3,113 per square metre in the Balearics in 2019. That’s well over double the price paid in the Comunidad Valenciana (€1,363 pm2) and 75% more than in Andalucía (€1,784).  Also, Mallorca, the main market of the Balearics, has introduced very restrictive tourist rental laws and these may be responsible for the fall in overseas buyers.  Although not buy-to-let investors as such, many overseas buyers are keen to cover running costs via rentals when not in residence.  In parts of Mallorca that’s now very difficult to do.

Overseas Buyers – Who?

The 2019 notarial returns show the Brits, as ever, heading the  nationality league table. And that’s in spite of an exchange rate about 20% weaker against the Euro since the Brexit referendum.  In total, British buyers purchased 13,358 properties in Spain in 2019, 38% more than the French who were in 2nd place with 8,342. The Germans were in 3rd place with 7,663.  In market share terms the British made up 13.2% of the overseas market, compared with 14.7% for 2018.  Nevertheless, the British alone bought more properties that all non-EU buyers combined.

However, there were 12.3% fewer buyers from the UK and the German number was down 3.18%  Nevertheless, there was strong growth elsewhere.  For example, buyers from Morocco were up 19.6%, from Ecuador 17.8%, Denmark 11.7% and US buyers increased by 7.8%. 

Overseas Buyers – How Much?

Although there were fewer buyers from overseas, spending per square metre was up in the most numerous nationalities. Furthermore, overseas buyers demonstrate greater purchasing power than domestic buyers.  The average spend per square metre nationally was €1,502 against overseas buyers €1,765, a 17.5% difference.  For example, the Germans spent €2,275 per square metre on average, 5% more than in 2018. The British increased their spend by 4.2% to €1,704 per square metre but the real big spenders in 2019 were from the US. They purchased at an average price per square metre of €2,473, more than any other nationality, an increase of 4.6%.

The 2020 Market post-COVID-19

I think the simple answer is” who knows?” However, if my inbox is anything to go by I think demand is going to hold up very well.  Enquiries are running way ahead of normal, people are getting ready to move forward as Spain’s foreign buyer hotspots open up to international arrivals.  I’m sure some purchasers have put their plans on hold but there does also seem to be a ‘let’s get on with it’ mentality out there as well.  I’m also sure many buyers are hoping to pick up a bargain but it’s not clear yet how many of those there will be.  I covered some of the wider market issues in my last blog here: Things to think about

One thing for sure, I won’t be holding my breath for this year’s statistics as they will be meaningless. 

From the Blog

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