_How are Spain's prime markets faring?

Over the past five years Spain’s property market has undergone a radical transformation. While challenges persist, not least Brexit uncertainty, the country’s prime market now appeals to a broader mix of buyers, with investors taking advantage of strong tourist numbers in recent years.

Kate Everett-Allen September 07, 2017

Economically, Spain finds itself on arguably its firmest footing for a decade, with GDP growth forecast to hit 2.6% this year, surpassing that of Germany, Canada and the US, according to the IMF.

Higher employment, rising disposable incomes and an upturn in consumer confidence are underpinning housing demand with mortgage lending up 20.2% in March 2017 compared to the previous year.

Prices have largely reached their floor across most regions with a lack of new supply helping to support values.

New housing permits fell 96% between 2006 and 2013, from around 850,000 units per annum to 34,000 units, according to Spain’s BBVA Bank. Since 2014 permits have increased by around 90% but remain low compared to pre-financial crisis levels.

For foreign buyers, Spain still represents good value. In 2017 although strengthening, the Euro is below its historical average against the US dollar and the pound, mortgages rates are competitive and tourism – for those seeking to rent their holiday home – has been strong in recent years.

However, Brexit, lingering political uncertainty (the new government needs to address a large deficit), the future tapering of the European Central Bank’s QE stimulus programme and a vote on Catalonia’s independence in October present their own challenges, but newly energised price growth is likely to be sustained at least in the short term.

In 2017, two key trends merit the attention of second home buyers. Firstly, the diversification of demand. British buyers (down 28% in the year to Q4 2016) are being replaced by Dutch purchasers (up 58% during the same period) along with Belgian, Scandinavian, Latin American and Turkish buyers. according to the Spain’s General Counsel of Notaries.

Secondly, Spain is witnessing the rise of the urban resort. Both Mallorca’s capital, Palma, along with Barcelona, Valencia and Malaga are undergoing a renaissance as buyers seek to combine a vibrant city centre and all it offers in terms of culture, cuisine and retail with the benefits of a beachfront and marina.

To view the latest findings for each of our prime markets including Madrid, Barcelona, Marbella, Mallorca and Ibiza download the Spain Insight 2017 or for more information on the market please contact either Kate Everett-Allen or Mark Harvey.