Foreign Home Buyers Boost Spanish Housing Market

According to the General Council of Notaries’ statistics on housing transactions, the number of purchases made by foreign buyers increased by 22.6% during the second quarter of 2013. Specifically, these buyers purchased 14,593 homes in Spain in that period, which the notaries said represents a “significant increase over previous quarters”.

In the distribution of these operations, those made by non-resident foreigners accounted for 54.9% of the total. The Council said that “the behaviour between the segment of resident and non-resident foreigners has been inconsistent”, and that the most likely trigger of this recent surge would be the authorisation to grant residency permits to purchasers of real estate with a value of 500,000 euros or more.

The first quarter experienced a moderate increase of 4.4%, following a “strong” increase in transactions in the last quarter of 2012 due to the elimination of the tax deductions for house purchases, which came into force on 1st January, while non-resident foreigners were seen as the “engine” of all foreign transactions, increasing by 43% year-on-year.

Murcia, a favourite destination

The coastal regions registered more home purchases by non-resident foreigners than the inland regions, due mainly to the demand for holiday homes on the coast.

Murcia was the region to experience the highest growth in the second quarter of 2013, with an increase of 42.9%, followed by Andalusia (+37%), Valencia (+31.5%), Asturias (+25.6%), the Canary Islands (+21.8%), Catalonia (+20.9%) and Cantabria (+16%).

With negative figures stood the Basque Country (-35%), Castilla y Leon (-33.1%), Navarra (-30.8%), Castilla La Mancha (-26.3%), Galicia (-20.4%), Madrid (-10.4%), La Rioja (-9.1%), Extremadura (-7.7%) and Aragon (-1.5%).

The notaries reported that the price per square metre resulting from all foreign transactions stood at 1,380 euros, representing a drop of 5.3% year-on-year, and said that: “In principle, the evolution of the price per square metre seems to point to a certain deceleration in its fall”. However, they noted the higher prices of the homes purchased in the Balearic Islands (4.1%) and the Canary Islands (+3%), and also the nominal increase in the price of properties acquired in Navarre (+0.2%).

With regard to the nationality of non-resident buyers, El Mundo reported that the Belgian citizens were the most active, with their transactions increasing by 78.1%, followed by non-resident French buyers (+70%) and German buyers (+35.3%).

Although British buyers’ transactions experienced an increase of 24.6% year-on-year, their 15.5% share of the total transactions registered in the second quarter of 2013 contrasts with the 49% share they accounted for in the second quarter of 2007.

Finally, in the segment of foreign residents, by nationality the behaviour was mixed. Belgian citizens’ transactions increased by 42.1% followed by Moroccans (+40.2%), Russians (+20.5%), French (+8.1%) and Germans (+5.2%).