Foreign buyers are reviving the Spanish property market in some areas
Foreigners are increasingly buying property in Spain which has resulted in a slight increase in prices in areas popular with Russian and French buyers, according to estate agents.
The latest figures from the Public Works Ministry show that 8,803 houses were bought by foreigners in the third quarter of 2012, an increase of 18% from a year ago.
This is consistent with the growth in this area in the last five quarters, according to The Spanish Brick agency. The firm said that in the first and second quarters of 2012 it saw an increase of 16.2 and 15.3% consecutively.
‘This is great for the market because of the vast quantity of homes sitting around unsold since the crash in 2008, and the Spanish government is taking advantage of the situation by promoting sales and tax improvements to non-residents and foreign buyers,’ said director Daniel Talavera.
Some might call it good marketing, others desperation, but moves by the Spanish government are designed to encourage more foreign buyers, especially those from Russia and China who are regarded as having more money to spend on the luxury of foreign property.
Spain is considering giving residence cards on a temporary basis to non-residents from outside the European Union that buy homes worth more than €160,000.
According to a market study published by estate agents and developers the most desirable areas for foreigners include Girona, Barcelona, the Balearic Islands, Malaga, and Alicante.
It found that house prices in coastal resorts like Lloret de Mar, Blanes, and Roses have risen slightly and an increase in demand from French and Russian holiday home buyers lies behind the rise.
‘This increase is clearly driven by sales of second homes to Russians and French,’ Ramón Coromínas told the Spanish press. He added that Russians favour property on the South Costa Brava, around towns like Lloret de Mar and Blanes, whilst the French go for homes in the Alt Emporda, close to the French border.
The report also reveals that Girona, the provincial capital, has been displaced by Figueres, capital of the Alt Emporda, at the head of the regional sales rankings. Figueres also has a bigger stock of property to sell, and prices there have fallen more.
But while foreign sales are doing well there are changes that are discouraging home ownership in Spain. Mortgage tax benefits for families have been taken away, and the VAT on new homes increases on 01 January 2013.
Spain’s unemployment rate is high at 25% and as banks have tightened lending conditions so it is perhaps not a surprise that only foreign buyers are pushing up the figures.
Talevera pointed out that even although there has been an increase in foreign buyers his firm still saw an overall decline in sales between July and September of 1.17%. And it looks like new home sales are dragging the market down. Existing home sales increased 1.7% compared with a year ago but new home sales fell by 6.7%.
‘All in all, in the past year, we saw a 5.1 % drop from the year before. This all demonstrates to us that even though home prices keep falling, the market is still not really recovering due to these other pressing economic factors,’ added Talevera.