Spanish property foreign demand in the first quarter of 2021 – still 20pc below where it is!

 

Foreign demand remains nearly 20 percent lower than a year ago, when the coronavirus started reversing the world.  property for sale in qatar

We already knew about the virus in China that started spreading in Europe in early March but life was still quite normal in Spain; on 8 March there were massive feminist marches celebrating International Women's Day, making it difficult to believe we would all be confined to barracks less than ten days later, starting on 15 March. Thus, Coronavirus had largely not affected the first two and a half months of the quarter, which explains why sales fell by 6.4 percent in this same quarter.

That said, before the arrival of Covid-19, the trend was already down, with an increasing number of headwinds as political tensions beginning to turn foreign investors from Spain. In comparison, C19 was a hurricane and the other market forces looked like a gentle breeze, both positive and negative.

So how did foreign demand in Q1 this year compare to the same quarter last year, when they were relatively normal all but two weeks? The answer is not great, largely because C19 makes traveling to Spain difficult.

In the first quarter there were 12 561 domestic sales of a foreign buyer, down 17.8% compared with Q1 2020, according to the latest data by the Spanish Land Registrars Association (chart above).

The graph clearly illustrates the period of lock-down and subsequent recovery, which left the foreign market nearly 20 percent lower than before. That's about 3,000 less sales at home and about 450 million euros of lost foreign investment. Just another reason why the Spanish economy doesn't look great.

National market foreign demand

The UK remained the largest foreign buyer group in markets with 1,521 purchases and a 12.5% foreign market share and the French and Germans, as can be seen in two chart below.

How did domestic markets like last year? Un surprisingly, China and Russia's Golden Visa markets have fallen by 58% and 33%, respectively, as travel restrictions, among other factors, hit most badly. The core European home markets in Germany, France, the United Kingdom, and Holland were around 20% lower, while Sweden and Belgium were more resilient with an 11% and 5% decrease. The residue, which includes first and second home purchasers from around the world, decreased 17.7%.

External market share

Local demand has improved the storm of the coronavirus. In the first quarter, the Spanish purchased 116,667 registered homes, up 4.1 percent from the first quarter last year. As a result, the Spanish housing market's foreign market share declined to 9.7 percent in Q1, down from 12 percent before the pandemic. Unfortunately, locals don't buy the homes that foreigners had previously picked up. These homes are largely sold out. Where do we go?

Foreign demand in recent years peaked at 17 338 in the second quarter of 2018 and then gradually declined before plunging with Covid in the second quarter of 2020.

If you regard Q1 2019 as the pre-Covid base year, the international market is still 23 per cent less than was in volume, mainly because of C19 (there are other factors to be taken into account, such as Brexit and Spain's high taxes).

In places like Marbella and the Balearics, the high end of the market is once again booming, where pain is dropping disproportionately in places like the Costa Blanca, according to estate agents.

Some groups have been economically successful in the pandemic, some have been ruined and some have borrowed a lot of time. I can well imagine the high end bubbling for a while while when rich buyers are looking for residences with space in the sun, but I can also imagine that the mass market struggles to do anything better than it now is about 20% lower than it was, for at least a while.