Home Buying In Spain Gets More Expensive For Foreign Buyers

BY Realty Plus

Foreigners spend an unprecedented amount when buying a home in Spain. According to data from notaries, non-residents paid an average of €2,715 per square metre in the second half of 2023, 6.1% more year-on-year and the highest figure on record.

This price has boosted the average paid by foreigners as a whole (residents and non-residents), which stood at €2,175/m2 and returned to 2008 levels after growing 4.1% year-on-year; as well as the total average price paid for homes in Spain, which reached €1,712/m2 including foreigners and Spaniards, with an increase of 2.1% year-on-year.

The highest average prices were paid by buyers from Sweden (€3,077/m2), the USA (€3,006/m2), Germany (€2,848/m2) and Switzerland (€2,828/m2). Buyers from Norway, Poland, Russia, the Netherlands, France and Italy also exceeded the average price paid by all foreigners while the lowest amounts were paid by Moroccans (€723/m2), Romanians (€1,096/ m2) and Bulgarians (€1,219/m2). In relative terms, the highest price increases were recorded by Poles (17.9%), Russians (16.8%) and Chinese (10.7%), well above the average (4.1%).

This boost in prices contrasts with the fall in transaction volume. Notary statistics put the number of property purchases by foreigners in Spain in the second half of 2023 at 63,183, a fall of 10% year-on-year. This is the lowest number since the first half of 2021.

Their share of total transactions also dropped, ending last year at 20.9%, after accumulating two consecutive semesters above 21%. Nonetheless, this is the third-best figure since records began. However, there are some areas of the country where foreign purchases have increased in year-on-year terms: Asturias (11.5%), Cantabria (4.0%), La Rioja (3.4%), Murcia (1.8%) and Castile-La Mancha (1.1%).

The other 12 autonomous communities have registered red numbers, with the Canary Islands (-21%), Balearic Islands (-20.7%), Andalusia (-12.4%), Catalonia (-11%) and Navarre (-10%) leading the declines; followed by the Valencian Community (-8.7%), Aragon (-8.5%), Basque Country (-8.5%), Community of Madrid (-5.9%), Extremadura (-5%), Castile and Leon (-4.7%) and Galicia (-2.9%).

If we look at the total number of transactions, the Valencian Community continues to lead the Spanish ranking at 18,919, representing 29.94% of the total. In other words, three out of every ten homes purchased by foreigners in Spain are in this region. For months, the Levante area has been leading the real estate market, not only for foreign buyers. The autonomous region also registers more transactions than Madrid and Catalonia in the domestic sector.

Experts highlight several factors behind this growing interest. For example, the region has a large, stable residential demand, with primary residences, second homes and both Spanish and foreign clients; affordable prices compared to other locations; high profitability for investors, good transport links and the appeal of Mediterranean living.

For Esther Abad, Territorial Coordinator for Levante and Catalonia at Foro Consultores, the high proportion of foreign buyers in this community, especially in Alicante, has been the main driving force, as it is "a profile with a high level of activity, which is less sensitive to prices and interest rate rises than Spanish buyers".

One step behind the Valencian Community is Andalusia, with 11,768 transactions formalised by foreigners between July and December 2023; followed by Catalonia (9,773), Madrid (4,502), the Canary Islands (4,280) and the Balearic Islands (3,028). At a greater distance are Castile-La Mancha (1,603), Castile and Leon (1,164) and Aragon (1,003), while the other autonomous communities have remained below one thousand transactions.

In addition to the record average price paid by foreigners for homes in the country as a whole, the volume of transactions formalised in Asturias also stands out, where for the first time more than 700 sales have been recorded by buyers from outside Spain. It is the only region where transactions are at an all-time high.

The autonomous region has become more attractive in recent years for international clients, who often look for more rural than urban or Mediterranean locations. According to idealista data, last summer the Asturian town of Ponga was among the most sought-after towns with less than 5,000 inhabitants by foreign users to buy or rent a property, occupying ninth place in a ranking led by Benitachell (Alicante). In fact, the Asturian town reported more foreign demand than Spanish demand.

According to the notaries, the group of foreigners who bought the most homes was British, which accounted for 9.7% of the total number of transactions (6,155), followed by Moroccans (7.14%) and Germans (7.11%). "The group of nationalities that includes the rest of foreign buyers from outside the EU accounted for 11.6%, thus continuing the upward trend shown in previous semesters," the notaries emphasise.

Transactions by Norwegians (-30%), Germans (-25.8%) and Swedes (-25.1%) recorded the largest year-on-year decreases, while Ireland (12%), Ukraine (9%) and Russia (4.7%) were the countries with the largest increases in sales.

Although the Colombian nationality does not stand out in terms of the volume of transactions, nor for having registered a pronounced increase, it has set all-time highs, after formalising 932 transactions. A large part of this record comes from the luxury market and the interest that prime housing is sparking among the highest incomes in the Latin American country.

According to Elena Jori, director of real estate at the real estate consultancy Home Select, Colombian nationals are among the Latino profiles looking for more homes in locations such as Madrid, attracted by the lifestyle or the protection of their capital from political instability in their respective countries of origin.

Colombian homebuyers also accounted for the largest drop in the average price paid for homes (-12.8% year-on-year), followed by Irish buyers (-7.6%).

Analysing by residence and autonomy, the French overtook the Germans and British in the second half of 2023 and led the share of sales among non-resident foreigners in the two Castilian regions, Extremadura, Aragon, Catalonia, Navarre and Cantabria. The British were the main buyers in the Valencian Community, Murcia and Andalusia, the Germans in the archipelagos, Galicia and Asturias, Americans in La Rioja and the Basque Country, and the Chinese in Madrid.

Among resident foreigners, Moroccan and Romanian nationals were the main buyers almost everywhere in the country, except in Galicia, Valencia and the archipelagos, where the share of Portuguese, British, German and Italian buyers was higher, respectively.

Tags : transaction volume Valencian Community Home Select Colombian nationals  Elena Jori Home Select Colombian nationals Valencian Community