Number of overseas buyers in Spain falls substantially, new analysis shows
Overseas buyers in Spain are becoming more diverse but overall the number did not increase in the final quarter of 2018, new research shows.
It is the first time that the number of foreign buyers did not increase for several years, according to property market analyst from Mark Stucklin of Spanish Property Insight.
He pointed out that the latest report from the Association of Spanish Land Registrars that overall the market was up 7% in the fourth quarter to 120,199 home sales inscribed in the Spanish Land Registry, the lowest level since 2014.
He explained that the growth was entirely driven by rising local demand, up by 8.6% to 104,982 sales while the number of Spanish homes bought by foreign buyers was 15,217, almost unchanged compared to the fourth quarter of 2017.
‘Unchanged means that foreign demand did not grow at all in the last quarter for the first time since 2010, and the upward trend in foreign demand has come to an end, at least for now,’ he said.
He also pointed out that in the fourth quarter of 2017 foreign demand was growing at 20% per annum, whilst in 2016 it was growing by more than 30% in some quarters. But even though growth has fallen to zero, it is still around 13% of the Spanish property market, where it has been since 2014, having risen from a low of 4% in 2009.
A breakdown of the figures shows that the biggest group of overseas buyers come from the UK at 17%, followed by 8% from Germany, 7% from France, 6% from Belgium, 5% from Sweden and 5% from Italy, 4% from China and 3% from the Netherlands.
Stucklin believes that it is interesting that the British are still the single biggest group by far despite all the uncertainty, problems, and weaker pound brought on by Brexit and that the Germans were the second biggest group of buyers in three quarters out of four last year, whereas traditionally the French have been the second biggest group after the British.
‘The German market looks like it’s overtaking the French market, with potentially positive implications for the Balearics, where the Germans mainly buy, and negative ones for Catalonia, where the French tend to buy,’ he added.
He pointed out that an analysis of change in foreign demand by nationality shows more countries contracting than growing for the first time since the economic downturn a decade ago. Swedish buyers are down by 29%, Norwegian buyers down 16% and Belgium buyers down 15%.
Meanwhile, the number of British buyers have increased by 6% and buyers from other parts of the world up by 13%.
‘I assume the growth from the rest of the world group comes from an increasingly diversified number of countries providing a small number of buyers each but the Registrars don’t tell us. For the first time since the Registrars started publishing this data the USA was a big enough market, with 144 buyers in the quarter, to be listed in its own right,’ Stucklin said.
‘Clearly, foreign demand for Spanish property is cooling down. Each market will have its own story to tell, but the fact that so many key markets are going cool on Spain at the same time suggests part of the explanation lies in Spain itself. I guess part of the story is rising house prices that make Spanish property start to look expensive, or at least no longer a bargain,’ he explained.
‘For quite a long time during and after the Spanish real estate crash that started a decade ago, Spanish house prices looked like an absolute bargain to many foreign buyers. In retrospect it was a great time to buy. House prices have been steadily rising ever since in most areas that attract foreign investors, and at some point rising prices, combined with other reasons to be wary about investing in Spanish property, are bound to give a growing number of foreign investors cold feet,’ he added.
But it could also be just a temporary dip. ‘I don’t expect foreign demand for Spanish property to go into a sharp decline, but I wouldn’t be surprised if growth is weak, flat or even negative over the next few quarters,’ Stucklin concluded..