Economy, Politics and Tourism
It has been a fairly turbulent few months politically for Spain and the recent elections were once again inconclusive with no overall majority for Pedro Sánchez and his socialist party (PSOE). However they have reached a preliminary coalition deal with the anti-austerity Podemos party to try to form a government. This should bring greater stability to the country, which is good news for the country’s property market.
Spain’s economy grew by 2% in the third quarter of 2019 and the annual growth for 2019 is forecast at 2.2%, according to the International Monetary Fund, higher than the UK (1.2%), France (1.2%) and Germany (0.5%). Unemployment has come down by 3.4% with the greatest drops seen in the Community of Madrid, Catalonia and the Balearic Islands.
In 2018 Spain received a record number of tourists (82.8 million) and it continues to be the world’s second most visited country after France. 2019 is expected to register a similar number of tourists although initial figures suggest a very slight decrease over the summer, particularly visitors from Germany and the UK, where the uncertainty over Brexit and the depreciation of the Pound has deterred some holidaymakers from travelling overseas.
Spain’s property market continues its upward trend, thanks to its cities and resort destinations offering some of the world’s best value residential homes compared to other cities. This, combined with its status as a top visitors’ destination, its unrivalled quality of life and low cost of living, all adds to its lasting appeal.
Property Market, Spain
Lucas Fox Sales
Lucas Fox has continued its positive trajectory for both the volume and value of its sales in the third quarter of 2019. The number of property transactions across the group (24 offices) in the first nine months of 2019 increased by 55% and the value of sales by 73% when compared to the same period last year. The average property price also rose, from €847,189 to €942,752, an increase of 11%.
The areas that registered the most significant increases were in Barcelona where sales more than doubled, and in the Catalan coastal town of Sitges where there was nearly three times the number of sales than in the first three quarters of 2018.
The average price of a property sold by Lucas Fox went up in almost all areas, most notably in Ibiza (€2.7 million), the Costa Brava (€1.63 million) and Marbella (€1.38 million).
Lucas Fox Buyer Profile
Looking at the buyer profile across the group, the proportion of international buyers versus national buyers has remained similar to previous years with 59% of buyers being foreign and 41% from Spain in the first three quarters of 2019. The motivation is split almost evenly between purchasing as a primary residence (31%), a second home (30%) or as an investment property (29%) with 7% buying to obtain the Golden Visa.
There are variations from region to region with the coastal areas generally dominated by foreign buyers purchasing second homes and the cities seeing more national buyers purchasing primary residences.
Sales Transactions, Spain
Government statistics show that the number of sales in the second quarter of 2019 decreased by 7% compared to the same period in 2018, bucking the trend of previous years. This was the pattern throughout almost all regions and cities in Spain due to the political instability ahead of the April 2019 elections. Three of the provinces that saw the greatest decreases in sales were the Balearic Islands (20%), the Community of Madrid (17%) and Málaga Province (17%). However, sales in Spain from the first to the second quarter of 2019 increased by 8.5%, again a trend seen across most regions. The number of sales transactions in Spain is now nearly 64% higher than it was in the second quarter of 2014 but it is still 34% below the second quarter of 2007, around the peak. The compound annual growth rate (CAGR) of transaction numbers across Spain since the second quarter of 2014 is 10.3%.
The number of sales transactions in Spain’s key cities in the second quarter of 2019 followed the same pattern as the provinces, seeing annual drops of nearly 20% in Madrid, just under 13% in Valencia and almost 5% in Barcelona when compared to the same period in 2018. Barcelona and Valencia saw sales increases from the first to the second quarters, however. New homes sales increased by 1.7% across Spain and by 13% in Barcelona, whilst 2019 looks to be an outstanding year for this sector in Valencia where new homes transactions increased by nearly 280%. Madrid new homes sales decreased by 15%.
Foreign Buyers, Spain
By the second quarter of 2019 foreign buyers represented almost 12.5% of all buyers of Spanish property according to the Spanish Land Registry. This compares to just 4.2% in 2009. Regions that had the highest proportion of foreign buyers included Málaga Province (which incorporates the Costa del Sol) where nearly 28% of buyers were non-nationals, the Balearic Islands where foreigners accounted for 27.5% of sales and Girona Province (which includes the Costa Brava) where foreign buyers represented 26% of all sales. The region with the highest proportion of foreign buyers has consistently been Alicante Province (which includes the Costa Blanca) where they accounted for nearly 42% of all sales in the second quarter of 2019.
Sales Prices, Spain
In contrast to the fall in transaction numbers, sales prices across Spain increased by just over 4% year-on-year, when comparing prices from September 2018 to September 2019, according to the property portal Idealista. Prices have grown by more than 12% since September 2014, around the time when they had bottomed out across the country but are still over 14% below that of September 2007 when prices were at their peak, suggesting some margin for growth. The provinces that registered the most significant price rises were the Balearic Islands (11%), the Community of Madrid (7%) and Barcelona Province (5%), although the city of Barcelona saw another property price drop year-on-year – by 1.7%, averaging €4,205 per square metre in September 2019. Property in Valencia City registered an annual rise of 6% (€1,767 per square metre) and Madrid City saw prices increase by 3.3% (€3,770 per square metre).
Both Madrid City and Barcelona City have now surpassed the prices registered in September 2007 – by 8.7% and 9% respectively. Valencia City prices are still 24% below what they were.
Comparing prices in Spain’s three major cities in September 2019 to prices in September 2014 when they had bottomed out, Madrid prices are up by 43%, Barcelona by 38% and Valencia by 34%.
Note the following figures are provisional:
- INE (Tourism) (from January 2019)
- Ministry of Development, Spain (from Q2 2019)
View Lucas Fox Spanish Real Estate Market Analysis Q1-Q3 2019: Barcelona
View Lucas Fox Spanish Real Estate Market Analysis Q1-Q3 2019: Madrid
View Lucas Fox Spanish Real Estate Market Analysis Q1-Q3 2019: Costa Blanca & Valencia
View Lucas Fox Spanish Real Estate Market Analysis Q1-Q3 2019: Costa Brava & Girona
View Lucas Fox Spanish Real Estate Market Analysis Q1-Q3 2019: Barcelona South Coast
View Lucas Fox Spanish Real Estate Market Analysis Q1-Q3 2019: Tarragona
View Lucas Fox Spanish Real Estate Market Analysis Q1-Q3 2019: Costa del Sol
View Lucas Fox Spanish Real Estate Market Analysis Q1-Q3 2019: Galicia
View Lucas Fox Spanish Real Estate Market Analysis Q1-Q3 2019: Ibiza & Menorca