According to the Association of Property Registrars, property purchases by foreign capital reached record highs, representing almost 15% of the total number of transactions in 2023. Spain is always an attractive country for foreigners, so good property transactions are also expected for this type of client in the summer and growth in the summer season, according to experts consulted by idealista/news.
In economic terms, the impact is significant, given that a recent report by the Association of Developers and Builders of Spain and the consultancy firm PwC notes that home purchases by foreigners contributed €6,351 million to GDP in 2022, of which €1,758 million corresponds to new builds.
Anna Puigdevall, general manager of ANAI and treasurer of FIABCI Spain, explains that foreigners continue to purchase in Spain, and in the first quarter of the year, there was an increase compared to the last quarter of 2023. "And there is always an increase in the second-home market during summer, therefore, we expect it to exceed the 2023 data again".
According to data from idealista/hipotecas (idealista's mortgage broker), collected in the 2023 idealista/hipotecas annual report, the non-residents who signed the most mortgages in 2023 were British, German, Swiss and American. Specifically, the British accounted for 15.5% of the total. They are closely followed by Germans (14.1%), while Swiss nationals complete the ‘top 3’ (accounting for 9%).
Conditions for mortgages for non-residents are somewhat more restrictive because the risk assumed by the bank is higher. Instead of covering up to 80% of the property's appraised value, institutions lower it to 70%, and even 60% in certain cases, which implies having a higher prior saving.
Summer, good time
For Puigdevall, a situation that is starting to occur with this type of sales is that it is becoming less seasonal, but in summer it increases in coastal areas. "Even so, we encourage transactions in times like the present, now is a good time to buy".
The best attraction areas
Puigdevall focuses on the areas of Valencia, Andalusia, Murcia, the Canary Islands and Catalonia, which are the most attractive for foreigners. According to idealista/hipotecas data, the Valencian Community closed with 27% of all transactions by foreigners who bought homes in 2023, and the rest were Andalusia and Catalonia, with 16% each.
The Mediterranean area not only stands out in terms of the number of transactions signed, but it is also where the highest volume of mortgage applications for home purchases by foreigners is concentrated. In this case, the Valencian Community accounts for 28.2%, while Andalusia occupies second place (20.7% of the total) and Catalonia third (14.7%). The Canary Islands (9.48%), Madrid (9.43%) and the Balearic Islands (5.36%) are the next most important regions in the ranking.
New nationalities interested in homes
The general manager of ANAI comments that, although the British are still the nationality that buys the most properties, they have been dropping recently, and the Belgians and Germans are gaining ground. "We are also seeing a significant increase in the number of Americans, although in absolute terms their weight is still low".
As for their profile, the idealista/hipotecas snapshot is that of a 41-year-old individual, with an average household income of more than €5,900 per month and who wants to buy a house costing around €213,000 – a price up to 20% higher than the national average. The Mediterranean area continues to be the most popular, while the fixed-rate mortgage remains the preferred choice for financing the purchase.
Another variable is that their economic effort to buy a home is 21%, four points below the Spanish average, while the British continue to be the nationality of reference, although followed at a short distance by the Germans.
The Canary Islands consider limiting foreign house buying
The president of the Government of the Canary Islands, Fernando Clavijo (CC), has stated in the control session of the Canary Islands Executive in the island Parliament that it is time to negotiate with the EU the possibility of limiting the purchase of housing by foreigners in the archipelago. Just a few weeks ago a similar proposal from Nueva Canarias was rejected.
Foreign purchases in Spain fell by 7% at the end of 2023
In the fourth quarter of 2023, foreigners bought 30,796 homes in Spain, 7% less year-on-year, representing 18.4% of total transactions. According to data from the Ministry of Housing, the majority of transactions were carried out by residents (17,231 units, 5.8% less year-on-year), while non-residents recorded a larger decrease (13,565 transactions, with a decline of 8.6%). %).