The best year for home sales in Spain in more than thirteen years has been saved with record behavior in foreign demand. Of the 646,241 operations that were closed last year, according to data from the Association of Registrars, international buyers signed more than 88,800, 13.8% of the total, a level that had never been reached before. This volume also represents a double-digit increase in relation to the acquisitions that were carried out in 2021, when the real estate market and the economy in general were still affected by the blows of the Covid-19 pandemic (then the purchases and sales of foreigners represented 10.8% of the total registered).
This segment, which could be negatively affected in the shortest term by the expected slowdown in the main homebuying countries in Spain (United Kingdom, Germany and France), presents optimistic prospects for the remainder of the decade due to the expected impact of the aging population. Demographic trends -if the current percentage of purchases by nationality is maintained- suggest that between 2026 and 2030 home acquisition by foreigners could increase by 20%, says Judit Montoriol, chief economist at CaixaBank Research.
They would therefore be driven by retirees who will spend part of their retirement in Spain, that is, by citizens with higher pensions than average, a higher savings rate according to Eurostat and with greater purchasing power; but also because of the new professional profiles that are emerging with the push for teleworking, such as digital nomads. In this sense, in the entity considering that aspects such as tourist competitiveness, regulation, taxation, the health system or the adaptation of the real estate market to the preferences of foreign demand can play in favor of Spain as a destination for these investments in the projected time scenario.
Only taking as reference the statistics of the Organization for Economic Cooperation and Development (OECD) and the British National Statistics Office (ONS), in the entity they foresee that between 2026 and 2030 the population or more years an increase of almost 1.2 million people among the European countries that to date have been the largest homebuyers on national soil: the United Kingdom, Germany, France, as well as the Netherlands, Belgium, Sweden, Finland, Denmark and Norway .
In general, foreign demand continues to contribute to a large extent to the increase in home sales in some regions, especially in those where the weight of the tourism sector is greater, as explained by BBVA Research. Its latest report ‘Real Estate Situation’ reveals how in the case of the Valencian Community, 64% of the increase in sales that occurred in the first half of last year was due to the behavior of foreign demand. This percentage stands at 59% in the Canary Islands and 48% in the case of the Balearic Islands. In both archipelagos, the strong presence of international demand has caused the accessibility ratio to be above the historical average for both territories.
Neither the rise in interest rates nor the increase in the cost of financing have been an obstacle for this type of operation, even less in the case of luxury homes. In fact, in the last year, operations on homes of more than 500,000 euros gained relevance, which, with a total of 8,975, reached around 10% of the total purchases made by foreigners -an unprecedented level-. These are transactions related to the purchase, by non-EU foreigners of the so-called ‘Golden Visa’, which allows these citizens to obtain a residence permit in Spain.
Outlook marked by uncertainty and rates
Looking ahead to the current year, in which the economy will grow but with less vigor than the last two years -when GDP grew by 5.5% per year, as confirmed this week by the National Institute of Statistics- and in which the The context will be marked by the uncertainty derived from the war in Ukraine, the financial turmoil or the tightening of monetary policy by the Bank of asset-refuge.
Investment in housing “would have prolonged its slowdown in the first quarter of the year, in a context of more expensive credit for housing purchases,” says the Bank of Spain in its latest quarterly report on the Spanish economy. Both the rate of execution of works and the purchase and sale of housing have been moderating since the second quarter of 2022, which would have already become a reduction in new credit operations for the acquisition of real estate, and would be consistent with a” new slowdown in investment in housing” between January and March of this year, adds the regulator.
At the same time, although the price of housing has been showing relative strength due, in part, to the limitations faced by supply in order to satisfy demand, the latest data handled by the entity point to a certain slowdown. In particular, house prices in the fourth quarter of 2022 fell 5.5% year-on-year, two points below the third quarter, and fell 0.8% quarter-on-quarter.
The Euribor and financial turmoil
For now, the 12-month Euribor -the main reference for variable loans in our country- fell this Friday to 3,533%, to stabilize in line with the main financing rates set by the ECB at its meeting on 16 September March. After the bankruptcy of the US Silicon Valley Bank (SVB) and the rescue of Credit Suisse by UBS, the index left behind the level close to 4% that it reached with the rise in rates to just over 3.3% against the possibility that the ECB would reverse the rate hike, something that did not happen in the end.
All in all, barely three out of every ten home purchases that foreigners formalized last year were made with a mortgage. Foreign investors barely represented 6.6% of the total loans made on real estate, according to the Registrars, a percentage higher by one point than the previous one and its highest level in the entire series. The weight of foreigners in the loans for the purchase of housing granted in the autonomous regions was greater in the Balearic Islands (16.9%), the Valencian Community (10%), Catalonia (9.3%), Murcia (9.2%) and the Canary Islands (8.6%).