The purchase of housing by foreigners has raised the year to the category of “spectacular” for the most exclusive segment. The last real estate company to present its results, the German company Engels & Volkers, has observed an increase in prices of 6.5% year-on-year in Spain driven by an increase in the proportion of non-residents in operations, a profile with higher spending and which is not so exposed to the tightening of financial conditions due to carrying out a large part of its operations in cash. Specifically, Constanza Maya, director of expansion at Engel & Völkers Iberia, assures that last year “more than half” of the real estate agency’s clients were foreigners, compared to around 40% the previous year.
The market has been behaving asymmetrically and the strength of purchases by non-residents has helped maintain the good tone. According to data from the National Institute of Statistics (INE), the average price of free housing grew by 4% in 2023. However, the professor of Economics at the University of Barcelona Gonzalo Bernardos – present at the event – believes that the incidence of “quality” purchases has caused the indicator to rise, despite the fact that in his opinion the most common residential market is on the decline.
A trend fueled by purchases by non-residents in the ‘premium’ sector in which “almost always” the most expensive transactions are with foreigners, highlights the president of Engels & Volkers for Spain, Portugal and Andorra, Juan-Galo Macià.
Furthermore, despite the vertical rise in interest rates in recent years to 4.5%, more than half of the houses sold by the real estate agency were acquired without the need to resort to loans. In Madrid the percentage of purchases through mortgages has dropped from 61% in 2021 to 47% in 2023, figures similar to those of the city of Barcelona, in which 53% of operations were carried out in cash, o Valencia, in which only 35% of clients resorted to financing
A year that goes on
For this year the prospects are better. Bernardos highlights that three aspects indicate that the year will get better, especially starting in the second semester. On the one hand, the strength of job creation increases purchasing power and gives more security to banks to offer credit to purchase housing.
The entities, for their part, will aim to expand the volume of loans as the European Central Bank lowers interest rates and in view of the fact that bank delinquency levels have remained low despite the fact that financial conditions have become more expensive. . Finally, the increase in immigration flows to Spain will increase the demand for housing.
Bernardos estimates that, unless there are international disturbances that squander this scenario, purchases of used homes could set a new record, something for which financing will be “key.” For the economist, this year transactions will increase by around 15% and the price will grow between 5% and 7%.
