Germans have overtaken the British as the biggest foreign buyers of Spanish property for the first time ever. According to the latest data just released for Q3 of this year by Spain’s Land Registry.
Foreign Buyer Demand Increases Overall
The new figures reveal that overall foreign demand continued to climb versus the same period last year to 16,600 sales. An Increase of 42% versus lockdown last year – but also still up by 8% versus the same pre-pandemic period in 2019. Suggesting that the Spanish property market continues to recover strongly.
German Buyers Take Pole Position
Of these transactions, German buyers accounted for 1730 purchases (10.4%) – beating British buyers with 1642 completions (9.9%) to the top slot for the first time ever since records began back in 2006.
British Demand Continues To Decline
So continuing a trend which we identified in Q2, when we outlined how British buyers were beginning to vanish from the Spanish property market. As the real impact of both Brexit and the Covid pandemic begins to kick in.
The Impact of Brexit On Demand
Brexit has made owning a property in the European Union a less attractive proposition for British buyers. As they are now restricted on the amount of time they can spend at their place in the sun to just 90 days out of any 180 day period.
Many properties were also being purchased as holiday rental investments. But the ROI for buyers has also been impacted by Brexit – as the amount of Modelo 210 tax payable has risen by 25% for Brits now they are no longer EU residents. Whilst previous tax deductibles such as mortgage interest and home insurance are no longer allowable within their returns.
The Impact of Covid On Demand
The Covid pandemic has not helped either – as travel restrictions have obviously led to a massive downturn in tourism to Spain, which means fewer potential purchasers are falling in love with the country and dreaming of owning their own place here. Whilst also making the returns from the holiday rental market far less reliable than prior to the pandemic.
Longer Term Trends
British interest in the Spanish property market has also been in longer term decline for some time. In reality demand has been slowly but surely tapering off ever since the 2008 recession – most notably since the 2016 announcement regarding EU withdrawal made by David Cameron’s government. And now this trend that has been further accelerated by both Brexit and Covid.
Positive Picture Overall
However, overall foreign demand continues to grow – along with domestic demand too, as the number of Spanish buyers is up by 52% versus last year and 28% versus 2019. Whilst British buyers still remain a sizeable, if now secondary, foreign market.
How Is All This Affecting House Prices in Spain?
Forecasts suggest that overall prices across Spain are set to rise by 4% over the coming year. With certain regions where tourist demand in high, such as Mallorca in the Balearics – a destination much beloved by German buyers – registering even greater increases.