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28 June, 2017
Even though 2008 is now almost a decade away, for some people it probably still feels like yesterday. Those people are likely to include anyone involved with the Spanish real estate market, which has long suffered from the after-effects of the financial crisis. Finally, however, the skies appear to be clearing over the Spanish property market and international buyers are returning.
Why international buyers matter to the Spanish property market
Unlike the UK, which is a very small and densely-populated country, Spain is relatively large and has a much lower population density across the country. Of course, some parts of Spain are very densely populated and house prices are correspondingly high (Olympic city Barcelona is probably the prime example of this), but there are relatively few of these (compared to the UK) and they tend to be in the centre/north of the country, whereas international buyers typically head to Spain’s coastal regions and as they are often going to Spain for play rather than work, they can be attracted to properties for sale in Spain, which would be of little interest to locals. This is an obvious, direct benefit to the Spanish property market and the economic stimulus it provides is an additional, indirect one.
Global demand for Spanish property
In quarter one 2017, sales involving international buyers were up 15.6% compared with quarter one 2016. What’s particularly interesting about this is that 41% of these sales came from the “rest of the world” area, in other words, countries which account for fewer than 100 sales per year each. This appears to be a fairly classic demonstration of how low numbers can add up to a significant effect. Even though demand from British buyers fell 23.6% year on year, British buyers still led the way in international sales, accounting for 15% of the total. Ireland and the Ukraine both saw a reduction in demand for Spanish property, but only of 5.8% and 0.5% respectively. Italy by contrast saw a tremendous 57.8% rise, although it’s worth noting that even with this increase, Italy was still out of the “top three” ranks of international buyer groups. The UK was followed by France (10%) and Germany (8%).
Spain versus Brexit
It’s interesting to see the renewed demand among British buyers and it raises the question of whether this demand is from people planning to move to Spain in spite of Brexit, or people who are already in the country and changing from being renters to buyers. While it is obvious that Brexit is the elephant in the room as far as the Spanish property market is concerned, the EU has made it clear that it expects there to be agreement on the status of EU nationals living in the UK and UK nationals living in the EU as well as the closely-related topic of freedom of movement prior to discussions on any trade deal. In simple terms, the sooner this point is agreed one way or another, the sooner the Spanish property market will be able to move on either by continuing to tap in to its traditional “buying countries” or by working to replace them.
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