2023 is Looking Good
"I expected the overseas market would fall back for a while after the post-pandemic surge but it's now clear demand from overseas buyers is stronger than ever."
The most accurate and detailed statistics showing how the overseas sector of the property market in Spain is performing are compiled by the notaries and published twice-yearly. They give breakdowns by nationality, price per square metre and autonomous region. This format has been applied since 2007 and, as a result, these stats give an overview of international buyer patterns from just prior to the 2008 market meltdown, through the recovery period 2012 - 2019 and the pandemic-influenced years 2020 - 2022.
In my opinion, statistics for the 18-month post-pandemic period July 2021 - December 2022 were distorted by a surge of foreign buyers and the latest set of notary figures, covering the 1st half year 2023, give a more realistic picture of the current market. What looked like a boom in 2022 really wasn’t, it was a surge of property buyers playing catch-up, lots of people entering the market at the same time, as I explained in an earlier blog here. In my view, everyone who had planned to buy but couldn’t because of the pandemic has now bought and what 2023 is experiencing is normal new demand. Looking back at our clients in 2021/2022 all were already actively in the market before the pandemic arrived or contacted us during lockdown periods to get ready for when travel restarted. In 2023 all our clients have been new to the search process,
Therefore, I think it makes more sense to compare new statistics with the years just prior to the pandemic to get a sense of what the overseas market is doing. I expected the overseas market would fall back for a while after the post-pandemic surge but it's now clear demand from overseas buyers is stronger than ever.
For the three years prior to the pandemic the number of overseas buyers had topped 100,000 annually for the first time. That barrier was broken in 2017 (100,116), the all-time record of 103,677 occurred in 2018 before falling back slightly in 2019 to 102,264. If we just look at 1st half year figures the previous best was in 2018, coming in at 53,427 so the increase for 2023 to 67,983 between January and June has obliterated that record by 27.2%. Overseas buyers accounted for a 21.4% share of the total Spanish property market in this period.
The average price per square metre spent by overseas purchasers is also well up when compared with 2019. In that year €1,783 was the average but that has increased in 2023 to €2,095 pm2, up 17.5%. The Swedes are the biggest spenders so far in 2023 and their average figure per m2 is now €3,036, compared with €2,367 in pre-pandemic 2019, an increase of 27.2%.
Overseas buyer spending power in all the overseas hotspots saw increases in the average amount paid per square metre by foreigners in the 1st half of 2023. In the case of Andalucía it was up 2.7% to €2,196 pm2. The Balearics increased to €3,945 pm2 and Cataluña was up 6.7% to €2,433. Meanwhile in the Canaries, which saw a double digit increase of 11.3% in 2022, it rose another 7.1% to €2,378 pm2. Set against the €1,553 average per square metre price paid by domestic buyers these figures highlight the importance of overseas buyers to the property market in Spain.
The breakdown by nationality in 2023 is following the pattern of previous years. The British have bought more than any other nationality, 6,498 in total, that’s 9.5% of the overseas market. When compared with 2019 the British element is down slightly, -2.7%, but it’s now quite clear that all the predictions of a post-Brexit collapse were wrong. What is notable, however, is that other nationalities are buying in larger numbers and I think it’s only a matter of time before the Brits are overtaken, probably by the Germans. In 2007, just before the 2008 market meltdown, there were only 1,003 German buyers in the whole year. In contrast, there were already 5,519 just in the 1st half of 2023.
The majority of international buyers head for the Mediterranean coasts and the Balearic and Canary Islands. This is nothing new and the trend continues in 2023. In fact, nearly 75% of the overseas buyers so far this year have purchased property in just six regions; the Balearics, the Canaries, Murcia, Cataluña, the Comunidad Valenciana (the Costa Blanca) and Andalucía. However, activity is far from evenly spread and in reality, it is concentrated in just a handful of locations and for an analysis at a more local level the figures for provinces and municipalities come from MITMA, the Ministry of Environment & Infrastructure.
A good example of uneven market activity is Andalucía. This is the largest autonomous region in Spain and has eight provinces. However, it turns out that 28.8% of all transactions in 2023 so far have been in just one province, Málaga, which really means the Costa del Sol. And when you drill down to the municipal level it gets even more unbalanced. Although there are 208 municipalities in Málaga province, just four (Málaga, Marbella, Estepona & Benahavís) accounted for 42% of all transactions in the year so far. And of those 18,857 property transactions in Málaga province 7,276 were by foreign buyers, that’s a 38.5% market share, way above the 21.4% national average. So foreigners matter much more in some locations than others.
The dominance of just one province is even more extreme in Cataluña with 63% of all 2023 purchases in the autonomous region occurring in just one province, Barcelona. And looking at the Comunidad Valenciana, 71.7% of all 2023 foreign buyers in this region bought in just one province: Alicante. (Source: MITMA)
Based on the 2023 figures we have so far it’s clear that, unless the 2nd half suffers a serious slowdown, the full year is likely to be the best on record for overseas buyers if the pandemic affected years are excluded. We'll know in April 2024.
For a more comprehensive look at the Spanish Property Market please take a look at the annual report here.
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