Property sales recorded in Spain are up sharply compared with last year, but it appears the much-vaunted Golden Visa hasn’t got much to do with it. While the General Council of Spanish Notaries recorded an increase of 45% in residential property sales in the first quarter of this year (relative to the same period last year), as well as an increase in mortgage loans, just 72 properties were sold as part of the investment-for-visa scheme initiated last year. So while the property market appears to have bottomed out and is rebounding (albeit from a very low starting point), the Golden Visa structure upon which such hopes had been pinned does not seem to be working. More than four times as many visa-related properties have been sold in Portugal during the same period, so where is the upsurge in sales coming from? Although encouraging, the increase in sales has to be qualified. Last year had a very low level of sales for artificial tax reasons, so any ‘normal’ month of sales would show an increase.
The bulk of the good news comes from the coastal regions where sales are driven almost exclusively by foreign buyers – mostly Northern European. This means that while Russian buyers continue to play an important role in the upper end of the market, the hordes of buyers from non-EU regions have not (yet) materialised. In addition, in spite of the increase in property sales recorded and the domestic market beginning to rebound in main centres like Madrid and Barcelona, it hasn’t bottomed out yet in other non-tourist parts of the country. A major cause of this is that although financing is slowly beginning to return to the market, it is mostly limited to 60% of the purchase value. Add purchase costs of 15% and buyers have to find around half of the purchase price, which limits the market largely to those who still have jobs or available funds, who have apparently great deals available to them. It will only be if mortgage loans become more commonly available again that the domestic market will rebound significantly and the foreign market also increase.
The strengthening market is definitely there, but always remember that national statistics don’t reflect what’s happening in each region, with the really poor being balanced by the more thriving, with the latter being the main cities and the tourist areas. For the secondary housing markets in Spain to return to full normality (whatever that is!?) it will require a sustained national economic recovery and that could still be a year or two or more away.
Statistic sources – Spanish Property Insight, Mercers and OPP Magazine
Campbell D. Ferguson, FRICS, is a chartered surveyor in Spain.His company Survey Spain Network arranges valuations and surveys by RICS chartered surveyors anywhere in mainland Spain and the Balearic and Canary Islands, and Gibraltar. This includes valuations, building surveys, structural surveys, building inspections and investment and development appraisals.