Spanish Property Market Report: January 2018

With the start of the new year, foreign buyers and investors alike are keen to know what 2018 will hold for the Spanish Property Market. In that respect, the official government statistics over the past year shows great promise for increased investment, with a massive rise in sales transactions by foreign buyers. With the remnants of the Financial Crash starting to seem more and more like a distant memory, confidence in the Spanish Property Market has returned and forecasts show that 2018 will continue the growing resurgence.

Growth in International Demand

2017 saw a significant rise in the proportion of foreign buyers who have sought to take advantage of the increasingly robust Spanish economy, which continues to grow at the fastest rate within the EU. Within the first two quarters of the year, home sales increased by an encouraging 13.4%, and foreign buyers accounted for 20% of the entire Spanish property market, a fifth of sales transactions in the first quarter of 2017 alone.

Rising Property Prices

The latest results showing property prices further suggests the Spanish property market has returned to a period of growth after a decade in decline. The National Institute of Statistics showed a 6.7 per cent rise in Q3 of 2017, based on the data from the Land Registry. Similarly, the Tinsa Index found a 4 % rise in November alone.

According to a price index of Idealista, some thirty cities have maintained positive property price increases. The highest rise was in Mallorca with an increase of 29.1% followed by the city of Malaga, where prices increased by 16.7% to 1.934 euros per square meter. This is consistent with the various lucrative investment opportunities that still remain up for grabs, namely apartments and villas at bargain prices and in prime locations along the southern region of Spain.

Further data published by the IPE, the Instituto de Practica Empresarial, a property-focused business school in Spain, forecasts that house prices will rise for the fifth consecutive year in 2018 at a nationwide rate of 6.1%. Above the national average, Madrid will lead the way with an increase of 10.8 per cent, followed by Castilla y León with 8%, the Canary Islands with 7.7% and Andalucía with 7.1%.

Looking at the various regions in Spain, the increase in sales transactions is no exception for renewed interest in the market.

Increasingly Diversified International Investor Presence

British Buyers still dominate the percentage of sales transactions in Spain, accounting for 13.9 % of all foreign buyers within the market. Following them are the French 8.8%, Germans 8.2% and Italians 7.7%. Scandinavians continue to show renewed interest in the property market, but are not as present as other European nationalities have shown in 2017.

It is interesting to see that expat demand now also includes US buyers, who are only second behind the French in regions such as Castille & Leon and Extremadura. That being said, the regions of Andalucia, Murcia and Valencia account for the largest percentage of foreign buyers in the country. Increased investment in Spanish property is also markedly seen in the Chinese, accounting for a whopping 1.7 billion euros in 2016 alone and a steady presence in 2017.

Significant Rise in Mortgage Approvals

The number of new mortgages is another good indicator of the health of the Spanish property market. According to data published by the INE, the number of mortgages in 2017 was around 315,000, an increase of 12 per cent since 2016. Further, the average amount of those mortgages was around 115,000 euros, which is a 5 per cent rise compared to the year before.

Rising Demand for New-Build Properties

Another significant indicator that contributes to the rosy outlook for the Spanish property market in 2018 is the quantity of new property construction licenses granted in 2017. According to the Ministry of Development, 53,977 licenses for residential property were granted between January and August 2017, a rise of 26 per cent compared to the same period last year.

While properties sold in Spain in 2017 were largely resale properties. Only 1/10 properties sold in the first quarter of 2017 appeared to be a new build, nonetheless, regions such as Andalucia have seen a massive splurge of New Developments, backed by increased demand of Scandinavian buyers looking for higher quality properties in the Region.

2018: A Lucrative Time to Invest in the Spanish Property Market

With such encouraging data analysts project that 2018 will be the best year on record. With property prices stabilizing and a steady increase in foreign buyers accounting for a larger share of home-buying in the market, 2018 is set to triumph over the feats of 2017 within the first two quarters.