Immigrants Help Buoy Spanish Market
December 1st, 2006
From Ecuadorean nannies to Romanian builders, millions of immigrants to Spain are buying their first homes and buoying the country’s cooling house market.
Spain’s immigrants have quadrupled to over four million since 2000, helping the country’s population grow as much in the last five years as in the previous 30. Most immigrants are of house-buying age and they could make the difference between a hard and soft landing for one of Europe’s highest flying house markets, where prices have risen 160 per cent since 1998.
Banks and lending agencies are tripping over themselves to sign up the new residents as demand from Spaniards eases following a decade-long housing boom. The willingness of some mortgage brokers to let low-income immigrants take on ever larger loans alarms some economists, who remember Spain’s last housing market crash in the early nineties.
Lenders see little cause for concern, so long as Spain’s economy continues to grow at about twice the pace of the euro zone as a whole and unemployment remains at a three-decade low.
“Immigrants are our new neighbours, they’re taking out mortgages at a far faster rate than Spaniards,” says Ignacio San Martin, real estate analyst with Spanish bank BBVA.
A third of mortgages for existing homes went to immigrants in the first quarter based on a study of houses sold by real estate firm Tecnocasa and financed by lending agency Kiron. Spanish banks report between 15 and 20 per cent of mortgages going to immigrants, even though they represent only 9 per cent of the population.
Across Spain, resident foreigners bought 12 per cent of homes sold in the second quarter, according to the Housing Ministry. Latin Americans are leading clients, followed by those from Eastern Europe, North African and Asia. Retirees and other residents from Northern Europe and North America form a smaller, wealthier group.
It is a shot in the arm for Spain’s house market, where prices have risen at around 17 per cent a year since 2002 but will fall to high single figures in 2006 and the rate of inflation in 2007, according to property consultants.
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