Figures from the Spanish Land Registrars Association show that foreign investors are flocking back to the Spanish property market in significant numbers. Like other European markets, the Spanish property market has struggled since the 2008 economic downturn which plunged the worldwide economy into a recession and nearly prompted a depression. Even though Spanish banks still hold a significant number of houses which were acquired after mortgage defaults there is now optimism that the Spanish market may be over the worst and the recovery is on the way.
First quarter numbers in 2017
Figures show that the number of sales involving foreign buyers increased by 15.6%, compared to the same period last year, which is a significant increase by any stretch of the imagination. The figure is even more impressive when you bear in mind that the number of British buyers of Spanish property fell by 23.6% year-on-year. We will address the issue of British buyers in Spain later in this article because the year-on-year fall does not necessarily replicate demand.
Overall the Spanish property market increased by 14.4% in the first quarter of 2017 with domestic demand for property up by 14.2%. This is encouraging news and the worst may be over but the European Union is currently addressing its greatest challenge to date, Brexit.
When you consider Brexit and the fall in the value of the pound you might be surprised to learn that British investment in Spanish property was still the largest group of foreign investors. British buyers accounted for 15% of the foreign market share in the first quarter of 2017 with France second at 10% and Germany lagging behind on 8%. It will be interesting to see whether this mix changes after the Brexit negotiations have been concluded because there is no doubt that this issue has had a significant impact on UK buyers.
The year-on-year fall in the number of British buyers, 23.6%, was way above any other country showing a reduction in investment in Spanish property. The only others to show a reduction where Ireland (-5.8%) and Ukraine (-0.5%). On the flip side of the coin, Italian buyers increased in number by 57.8% over the same period although possibly from a relatively low base number.
The rest of the world
One interesting fact which has emerged from recent statistics regarding Spanish property sales is the increase in the so-called “rest of the world” figure. This group accounts for countries where there are less than 100 sales per year but interestingly it has increased to 41% of the overall foreign investment market. Historically Spanish estate agents have targeted the likes of the UK but with so much uncertainty regarding Brexit, future relations with the European Union and currency issues, it may be time to look elsewhere?
As a consequence, many Spanish estate agents will be dissecting the 41% “rest of the world” figure to see where increased interest in Spanish property is coming from. There is no doubt that many people have for some time considered Spanish property to be relatively “cheap” so it will be interesting to see how long the ongoing recovery lasts.