The sale of homes by foreigners fell by more than 37% in the first half

Bad news for the Spanish real estate sector. The sale of free housing by foreigners fell 37.4% during the first half of this year, up to a total of 32,395 operations, according to data from the General Council of Notaries. In this way, the sale of homes by foreigners returned to the negative path in the first half of this year, after the timid increase in the second half of 2019, due to the impact of the coronavirus crisis in the real estate sector.

Specifically, the operations carried out by foreign buyers represented 17.3% of the total home purchases made in the period, in line with the average between 2012 and 2019. Differentiating by residence, 37.6% of foreigner sales transactions were carried out by non-residents. The number of operations in this segment contracted by 42.6% year-on-year, and there are now two and a half consecutive years of decline.

Meanwhile, foreign residents made the remaining 62.4% of home sales by foreigners, with a decrease of 33.7% year-on-year.

By autonomy, the norm was a general decline in free housing transactions by foreigners. Thus, in all the autonomous communities, these operations experienced decreases. The older ones were registered in Valencian Community (-42.2%) and Canary Islands (-42%), while with decreases of more than 30% there were up to twelve communities: Balearic Islands, La Rioja, Murcia, Catalonia, Castilla-La-Mancha, Cantabria, Madrid, Andalusia, Galicia, Castilla y León, Asturias and Estremadura. Already below 30% was Aragon (29.1%) and below 20%, Navarra (-19.9%) and the Basque Country (-19%).

On the whole, foreigners made just over 17 out of every 100 total purchases in the first half of the year, far from figures from previous years. The national average was once again exceeded in the Canary Islands (34.8%), the Balearic Islands (34% carried out by foreigners), the Valencian Community (32.5%), Murcia (26.3%) and Catalonia (17.4%), autonomies that concentrated 60% of total sales by foreigners.

Between the 10% share and the national average are six autonomous communities, one very close to the average – Andalusia (17%) – and the other five with a somewhat lower share: Aragon (11.5%), Madrid (11.4%), Navarra (11.2%) and Castilla-La Mancha (10.9%). Lastly, the six remaining autonomous communities (Cantabria, Asturias, Castilla y León, the Basque Country, Galicia and Extremadura) are between 6.6% and 3.9%.

Square meter price

Likewise, the average price per square meter of operations carried out by foreign buyers in the first half of this year, referring to free housing, stood at 1,791 euros. This meant an increase in prices of 3.6% year-on-year, and there are now 13 consecutive semesters with price increases in year-on-year terms.

Again, according to notaries, non-resident foreigners paid higher prices (2,249 euros per square meter) than residents (1,479 euros per square meter), the latter in line with nationals (1,471 euros per square meter).

The price of purchases by non-resident foreigners accelerated by half a percentage point (to 7.2%), while those of residents broke the trend of the previous semester and grew again (2.4%). In between was the advance in prices in purchases in which the buyer was national (3%).

According to notaries, the greatest advance of the prices paid by non-residents than residents is the usual trend since the second semester of 2013, although in the second semester of 2018 prices advanced at the same rate (2.7%).

At the regional level, the evolution of prices was uneven, falling in four autonomies and increasing in the remaining thirteen. Among the increases stood out, at double-digit rates, La Rioja (25.4%), Asturias (16.9%), Castilla-La-Mancha (11.5%) and Aragón (10.9%), among the 10% and 0% grew in the Basque Country, Navarra, Andalusia, the Balearic Islands, Extremadura, Castilla y León, the Canary Islands, Cantabria and Catalonia. The sharpest setback occurred in Galicia (-5.9%) followed by Murcia (-4.2%) and more timid were those that occurred in Valencia (-0.7%) and Madrid (-0.4%).