Figures for the second quarter of the year show that there were a total of 91,338 Spanish Property sales in total, beating last year’s total by 12.1% and being the second best quarter registered in sales of Spanish Property since 2010. The rise in sales of second hand Spanish properties was actually higher at 15% and there was a reduction in the sales of new property as to be expected due to the numbers of new properties actually coming onto the market as building slowed massively after the start of the crisis.
One of the interesting stats to note is that the rise in Madrid was over 9% year on year, a place where tax was reduced from 8% to 6% at the start of the year whereas a community where tax was increased to 10%, Valencia, actually registered reductions in the number of sales. Andalucia as a whole saw reduced sales by just over 2% but the Malaga province went up by over 12% which is an excellent result and proves how attractive that area now is and how the Costa Del Sol and Inland Malaga are coming back well after the crisis.
The yearly figures of Spanish Property sales also saw an increase of 12.2% year on year which again is a good piece of news for the Spanish property sector.
Regarding sales of Spanish Property to foreigners, the tendency is also on the rise. Funnily enough sales to foreigners also grew by a similar 12% over the period and now they represent 20% of the whole Spanish market.
That is huge.
The figures grew for EU nationals buying in Spain and also both the sector of residents from foreign countries and also non residents meaning of course that not only are people living here now looking to invest in Spanish Property but also new buyers are continually coming into the market.
This demand for Spanish Property by foreigners is no longer that of the economic migrants that came into Spain during the boom, typically construction workers from Ecuador, Peru, North Africa and Eastern Europe, but is much more driven now by the lifestyle migrants looking for a better climate and different yet recognisable culture which Spain is perceived as providing. They now come mostly from Northern Europe, North America and to a certain extent from Russia and China (Although the Russian market is drying up a bit due to the crash of the Rouble and restrictions on visas since the problems in Ukraine brought sanctions in place, see below).
The following chart shows that Spanish Property sales to non residents reported by the Notaries are now at a record high even compared with the highs of 2007. (The spike at the end of 2012 was when lots of purchasers brought forward their purchase to prior to the end of the year as tax on new build property was due to rise from 4% to 10% at the start of 2013 (Again we see how a ridiculous tax rate negatively influences people’s purchasing)
By region we can see that the attraction of Spain as a destination for foreigners is almost totally due to its reputation for beaches and sun. The majority of the demand is in just two areas, the Valencian Community and Andalucia and of course those areas account for the Costa Blanca and the Costa Del Sol amongst other places. These areas see a huge proportion of properties being sold to foreigners within the market as a whole with almost 40% in the Valencian Community for example. However demand is also high in Catalunya and Madrid at 21.6% and 10.1% of total sales due to the effect of Barcelona, the Costa Brava and Dorada and of course Madrid being the capital. The islands also have huge demand from abroad with 43.2% of all sales on the Canary Islands and 42% of sales on the Balearics coming from foreign buyers.
British buyers are still the greatest part of the market but they do not dominate like they did back in the boom days where up to 50% of sales and more were to British buyers in certain regions. These days British buyers make up 16.7% of the total market from foreign buyers showing that Spain remains a huge attraction for British buyers looking to buy the place in the sun. Demand has increased from the UK in the last two years by 75% and has been constant year on year. This is also true of the United States where demand has increased by over 100% in the last two years, from an admittedly low base, whereas Russian demand has increased by just 20% over a two year period but this hides the fact that in the last year it has actually fallen by 3% due to the Ukraine issues and the collapse of the Rouble as mentioned above.
So what can we take out from all of these figures?
Spain is in vogue again certainly but foreign demand is not the panacea to cure all of the woes of the Spanish property market and until the Spanish government starts to encourage foreign investment by “Rolling out the red carpet to foreign investors” (As stated by Mark Stucklin on the Spanish Property Insight blog and fixing the major issues with the Spanish Golden Visa for investors that have emerged then there is a slight brake on growth in the sector.
It is mostly good news. It is much better year on year than expected and confidence is returning in many sectors of the Spanish property sector. There is still unsellable, overpriced and badly located property which will not sell at any price but there is a suggestion of much more than just the first green shoots of recovery. The market in many areas os going in the right direction now.
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