Foreigners are acquiring more real estate at a higher price. Nationalities such as the Dutch, the Ukrainians or the Americans are gaining prominence in the market.
Foreigners have returned strongly to the Spanish housing market after the pandemic. In 2022, home purchases have broken records and the average price per m2 of real estate has reached the highest level since there are records. In the luxury sector, foreign demand has even grown more than national demand.
During this year, the British, Germans and French have remained the leading foreign buyers, although other nationalities have gained prominence. For example, the Dutch, the Norwegian, the Irish and the Ukrainian, although for different reasons. Demand from the US and Latin America has also gained momentum, boosted by the strength of the dollar against the euro.
Among the most important news in recent months is also the implementation of the tax on large fortunes, a new tax that must be paid by taxpayers with assets of more than 3 million euros and that will also affect foreign non-residents, which could have consequences on the real estate market.
The notaries estimated 72,987 housing transactions in Spain were led by foreign buyers in the first half of the year, the highest figure since 2007. In addition, these operations represented 20.3% of the total registered in the country as a whole, equaling the record registered in the second half of 2015; and the average price that they have paid for the properties has marked maximums. A trend that continued in the third quarter. According to the College of Registrars, between June and September, foreigners purchased 26,728 homes in Spain, representing 15.92% of the total number of registered sales and a new record in the historical series of this body, both in volume and weight over the total operations. The figures show a clear and consolidated upward trend and, above all, respond to the notable strength of the home transfer market.
On the other hand, foreign customers are increasingly interested in the luxury segment. This is corroborated by a study by the specialized real estate agency Lucas Fox, which states that the growth of foreign demand for luxury housing was faster than that of the local one in the first half of the year, reaching a record market share of 14.7 % at the end of the first semester. The company affirms that demand has been diversifying throughout 2022 and insists that "in an international context of growing uncertainty, foreign buyers have shown their confidence in Spanish real estate as a lifestyle option and a solid investment ”.
Foreigners have paid the highest price in history to buy homes in Spain in 2022. This is shown by data from the General Council of Notaries, which put the average price paid by foreign buyers for each m2 of houses at 2,062 euros during the first semester of the year. The amount not only shows an increase of 10.6% year-on-year but also breaks the record for the series collected by notaries since 2007, in the midst of the real estate bubble.
The new maximum price has been driven mainly by the average price paid by non-resident foreigners for their homes (€2,522/m2, also a record, growing by 2.9% year-on-year), and which far exceeds that paid by residents (€1,622/m2, increasing by 8.2% compared to the first half of 2021) and nationals (€1,560/m2, with an increase of 5.2% year-on-year).
In the first half of the year, prices grew in year-on-year terms across the whole of Spain, with Extremadura at the top of the list, with a rise of 34.3%; followed by Asturias (27.5%), Murcia (19%), Madrid (16.6%), Aragon (16.1%), Valencian Community (13.6%), Canary Islands (13.1%), Cantabria (11%) and Catalonia (10.4%).
The foreigners who paid the highest amounts per m2 in the first half of the year were those from Denmark (€2,870/m2), the USA (€2,837/m2), Norway (€2,701/m2), Sweden (€2,701/m2 ), Germany (€2,657/m2) and Switzerland (€2,567/m2). Buyers from the Netherlands, France, Belgium, Italy and Ireland also exceeded the average price paid by foreigners as a whole (€2,062/m2). On the other hand, Moroccans (€694/m2), Romanians (€1,097/m2) and Ecuadorians (€1,198/m2) paid the lowest average prices.
British, German and French continue to be the most prominent nationalities in the market by volume of operations, although this year buyers from the Netherlands, Norway, Ireland, Ukraine, the US and Latin America have gained prominence, although for different reasons.
According to data from notaries, Dutch, Norwegian and Irish foreigners led the increase in home sales in Spain, with increases of more than 100% in all three cases. In other words, between January and June, they formalized more than double the number of transactions than in the same period of the previous year.
Experts attribute this rise to factors such as the promotion of teleworking, the good climate, good communications, the technological 'hubs' that are consolidating in Spain, housing prices that are comparatively lower than in other European countries and the energy crisis.
Another leading nationality in 2022 has been the Ukrainian who, coinciding with the outbreak of the war with Russia, has formalized the highest number of home sales in Spain in history. According to notaries, between January and June, citizens from Ukraine purchased 1,237 homes in Spain, 73% more than in the first half of 2021 and almost 60% above the registered average of the last 15 years (774 units).
The increase in demand has occurred both in the traditional housing market and in the luxury sector, while the three provinces that arouse the most interest are Alicante, Valencia and Barcelona.
Buyers and investors from the US and Latin America have also gained prominence in the market, who have wanted to take advantage of the weakness of the euro, which in 2022 has lost parity with the dollar, to buy properties at a discount.
On the other hand, the British, the nationality that has stood out the most throughout history in the Spanish market, is losing ground. In the third quarter, 9.3% of these customers came from the United Kingdom, the lowest figure since registrars collect data, and a far cry from the almost 24% they came to represent of sales to foreigners in 2015.
Experts affirm that the preferences of foreigners are large houses, with a terrace and pool, located mainly in coastal areas, to be used as a second residence in most cases. Although interest is also growing in taking advantage of longer seasons or stays and teleworking, beyond the classic factors such as good weather, air connectivity or the cost of living, which is lower than in their countries of origin.
By location, the Costa Blanca (Alicante), the Costa del Sol (Málaga), the Balearic Islands and the Canary Islands continue to be the areas where foreigners have a greater weight in the housing market. However, depending on nationality there is also interest in buying a home in municipalities located in provinces such as Barcelona and Valencia in the case of Germans; or Madrid and Girona in the case of the French. On the other hand, the autonomous cities of Ceuta and Melilla and Algeciras (Cádiz) have been the areas most in demand by buyers from Morocco. The British, for their part, have focused on the capitals Madrid and Barcelona.
A study of the leading real estate marketplace in southern Europe confirms that there is also interest from foreigners in towns with less than 5,000 inhabitants. In fact, in 22 towns the demand to buy housing from other countries is higher than the national demand. The most prominent is Fuente Obejuna (Córdoba), followed by Garcirrey and El Milano (both in Salamanca), Cala Ratjada (Mallorca), Laroya (Almería), Valle Gran Rey (La Gomera) and Cómpeta (Málaga). In some of these small municipalities, the price of housing is below 500 euros/m2, while in others it exceeds 1,700 euros/m2.