With the latest figures out for the second quarter of 2014 showing the greatest number of sales of Spanish Property for 4 years and much better than expected trends in the Spanish Property Market, here at the Spanish Property Network we thought it was time to let you know who is buying property in Spain, people like you of course from all over the World.
There is an 80/20 split in the market with 80% of all sales being to Spanish people. The foreign market only accounts for 20% of the market but that is OUR market at the SPN and in many of the areas that we concentrate on the figures are much higher (the Valencia region for example has 40% of all sales being to foreigners) So 80% of all sales are to the Spanish but who is buying apart from the Spanish and what are they buying?
Firstly, suffice to say that the number of foreign buyers is not “Only” 20%. That is the highest number of foreign buyers in any market in the EU. Spain is still seen as a huge attraction in Europe and beyond.
As there were just over 91000 sales of property reported in the quarter the 20% of sales to foreigners made up just over 18,000 sales, over 200 purchases made per day.
The largest buyers of Spanish property from abroad were not surprisingly the British. The British love affair with Spanish property continues and is growing month on month for the last couple of years now. The UK economy is recovering, helped by copious quantities of QE, and this has created a mini housing boom especially in the South East of England and London specifically. The large number of clients coming into the SPN recently from the south east have suggested anecdotally that people are cashing out of that market and buying into a market perceived to be at a low or perhaps even its lowest point. Many people are selling up in London and buying with cash here in Spain after paying off their mortgage in the UK. The amounts that British buyers are willing to pay are still well below the figures for 2007, when prices were around 40% higher, but there are a greater number of transactions now.
You also have to bear in mind too that the pound fell in 2008 from around 1.47 Euros to 1.06, effectively killing the market for British buyers, and it has recently climbed to levels around €1.25 making Spain much more attractive than in 2008-2010. Not only do your pounds buy many more Euros but also prices have fallen at the same time meaning you have a situation where effective “Real” prices for British buyers with pounds have fallen by over 50% in the last six years. That is a very attractive proposition when you factor in the lifestyle cost too. Many of the British buyers are retirees living on a fixed income, their pension pots, and any rise in the value of the pound against the Euro means they have more money arriving in Spain on a regular basis. They just need to remember to use the services of a currency company rather than their banks to make the transfers and then they get even more)
The French came in next at just over 10% of foreign property buyers. Obviously Spain is very attractive for the French due to its proximity, many French buyers get a place on the Costa Brava just across the border from France, but there are other factors driving the numbers of French buyers. Firstly, price. Prices in Spain are a lot lower than in France not only for property but also for the cost of living after purchase. Having spent time on the Costa Brava and just across the border in Argeles Sur Mer in the last couple of years I can vouch for that. I think the day to day costs differ by around 40% between France and Spain; Supermarkets, Petrol, Council Taxes, Local taxes and more are much much higher in France.
Even more influential though over the last couple of years has been the effect of the huge increases in property and inheritance taxes and capital gains tax on French property. Rates of up to 75% capital gains tax have discouraged the French from buying in their own country and many of those “Economic Refugees” have decided to buy in Spain because of the perception that tax rates on property are much lower. Currently they are of course.
Thirdly the Russians are still buying large quantities of Spanish Property. However the numbers of Russians have actually fallen year on year due largely to the huge depreciation of the Rouble over the last year. Also the difficulty in getting visas due to the ongoing instability (Or maybe even war) in the Ukraine and economic sanctions imposed on the Russians by the EU is having an effect especially at the top end of the market.
Many Russians were supporting the high end of the market in Marbella, Mallorca, Barcelona and Madrid and those markets have cooled slightly due to the slow down in Russian demand over the last year. However many Russians are also buying in order to get their money out of the country and protect its value from the falling Rouble and many of those are at the lower end of the property spectrum. If they buy
Germans continue to buy in the Spanish Property Market of course and they continue to be strong in their traditional areas of Mallorca, The Costa Brava and the Costa Blanca. However there are not as many German buyers as would be expected at this stage of the economic cycle. There are far fewer German property investors, typically Germans invest in things other than property, they are more a nation of renters and tenants. It is surprising that there are almost as many Swedish and Belgian buyers as Germans. The large number of Belgians buying is particularly gratifying for the Spanish market as it is such a small country comparatively.
Surprisingly the Italians and Norwegians also appear in the list before we get to the Chinese. Italians often buy for similar reasons to the French, location, proximity and huge taxes in their own country and Norwegians for similar reasons to the Swedes, the climate and light when compared to the three months of semi darkness they have in their own country.
The Chinese are the great white hope for all property markets but they are more underrepresented than expected. There are various reasons for this. The setting of the Golden Visa figure at 500k priced many of them out of the market for automatic residency and there is a great difficulty in getting money out of the country. An individual in China can only transfer $50,000 out of the country in any given year. This puts a brake on capital flight from the country but also affects how they can buy property outside. Usually they get various members of the family to transfer 50k each out for them to a single account abroad to make the payment for property purchase but obviously this is a disincentive to greater numbers of Chinese buying.
Other nations make up to 33% of the market and of course this includes Americans, Canadians, people from the Middle East, Australians, South Americans and people from all over the rest of the World. Effectively where there is a problem in the World there are potential buyers of Spanish property as Spain is seen as a safe place to live with a benign climate and possibilities of the property not only being a place to live but also a long term investment as prices are perceived to be low. Therefore we see buyers from Egypt, Syria, Israel, Mexico, The Balkans and many other “unstable” areas.
Why do they choose Spain? Well many people strongly believe in the typical images of Spanish life and want to enjoy and become a part of them; siestas, fiestas and long hot sunny days spent overlooking the beach with a low cost of living and a relaxed pace of life.
In fact we could say that the majority of Spanish Property Buyers from abroad see what you see and want what you want because in our surveys of our clients this is what we see from them and this is what we find for people. When can we find it for you? Tell us more below and let us help you to find it.