Foreigners return to the market, paying record prices as golden visas end

In addition to rising prices, several nationalities have also set new transaction records. According to the historical notarial series, which dates back to 2016, the first half of 2024 saw property transaction records broken by citizens from eight countries across different continents.

In Europe, notable purchases were made by Irish, Italian, Polish, Portuguese and Ukrainian buyers, while in North and South America, Americans and Colombians led the way. Moroccans stood out in Africa. Additionally, the "non-EU" category reached its highest level to date.

Among all the nationalities, the most prominent in terms of transaction volume is Morocco, with its citizens purchasing 5,452 homes in Spain in the first half of the year. This accounts for nearly 7.9% of all foreign-led transactions. Morocco is the second most prominent country of origin, only surpassed by the United Kingdom (8.4% with 5,864 transactions) and ahead of Germany, which ranks third with 6.8%.

The second most significant nationality in terms of sales volume is Italy, with 4,332 homes purchased by Italians up to June, followed by Poland (3,105) and Ukraine (2,058). The number of transactions from Ukraine has surged by 70% in just two years, largely due to the Russia-Ukraine war.

Below the 2,000 mark are Americans (1,363 transactions), the Irish (1,186), Colombians (1,073) and Portuguese (921). Meanwhile, the "non-EU" category collectively accounts for over 7,700 sales.

In addition to the Valencian Community, several other regions achieved record figures for property sales to foreigners. Murcia led the way with 3,840 transactions, followed by Castilla y León, which recorded over 1,280. Meanwhile, Galicia and the Basque Country also posted noteworthy numbers, surpassing 900 and 800 transactions, respectively.

While the Valencian Community, Andalusia and Catalonia remain the most popular destinations for international buyers, other areas, such as the Balearic Islands and Madrid, are also attracting attention, particularly in the luxury segment.

Mallorca, for instance, is one of the world's top destinations in the high-end property market. It is especially favoured by buyers from Germany, the United Kingdom, Scandinavia and the United States, who show strong interest in second homes, including villas, sea-view apartments and country estates.

Madrid is steadily gaining prominence in the prime real estate market, particularly among international investors. This comes at a time when the profitability of the luxury property sector in major US cities such as New York, San Francisco and Miami is on the decline. The Spanish capital has emerged as a hub for foreign investment, setting itself apart from Barcelona, where local investors continue to dominate.

Notably, Madrid has, for the first time, been ranked as the second most attractive major city in Europe for real estate investment, second only to London. In recent months, the city has also drawn attention for its promotion of the so-called "Mbappé Law", a regional initiative aimed at attracting foreign investment – though this does not extend to real estate investments.

In mid-November, the Madrid Assembly approved a regulation offering a 20% deduction on the regional personal income tax rate for foreign investors who transfer their tax residence to the Community of Madrid after spending at least five years outside of Spain. This measure will apply to relocations effective from 2024.

To qualify, investors must maintain both their investment and tax residence in the region for a minimum of six years. The regulation excludes real estate investments, investments in entities domiciled in tax havens and those made by individuals who hold executive roles or work within the companies in which they invest. Eligible contributions include investments in securities, bonds, treasury bills, shares of listed and unlisted companies and contributions to limited companies, among others.

When it comes to housing preferences, foreign buyers typically seek homes with a southwest orientation, aiming to maximise sunlight, enjoy extended hours of daylight, and take in the sunset. In contrast, national buyers tend to prefer southeast-facing homes, which allow them to enjoy the sunrise while minimising heat exposure during the summer months.

According to data from the Property Registrars, foreign buyers also show a clear preference for larger homes compared to Spanish purchasers. Notably, 34.5% of property purchases by foreigners involve homes exceeding 100 m². Among them, American buyers lead this trend, with 50% of their purchases falling into this category. On the other hand, buyers from Argentina, Italy and France tend to buy smaller homes, often opting for properties under 40 m².

In terms of property prices, 9.7% of purchases made by foreign buyers exceed €500,000, with an almost equal split between EU and non-EU purchasers. The regions leading in high-value transactions include the Balearic Islands, the Community of Madrid, Andalusia and Catalonia.

This strong performance underscores the significance of the Spanish real estate market for foreign buyers, whether for residential purposes or investment opportunities.

Foreign mortgage applicants in Spain report an average household income of €6,566 per month, a notable increase compared to the €4,726 average at the start of 2022. Approximately 40% of these applicants earn more than €6,000 per month.

The majority (75%) of mortgage applications are for amounts below €200,000, with only 5.4% seeking financing of over €400,000. On average, the financing requested represents 74% of the property’s purchase price, while the average debt level stands at 24%, well below the 30–35% threshold considered reasonable by experts.

Overall, foreign buyers are generally in the market for more expensive homes than Spanish buyers.