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PROPERTY

Brits remain top foreign buyers in Spain, despite (or because of) Brexit

The latest data reveals that Spain’s property market is back to pre-crisis levels and that British buyers are the leading group of foreigners investing in Spanish real estate.

Brits remain top foreign buyers in Spain, despite (or because of) Brexit
Photo: AFP

During the first half of 2018, a total of 53,359 house purchases by made non-Spanish nationals, according to the latest data released by the General Council of Notaries this week. 

The figure is 20,000 more than at the peak of the property boom in 2007 before the bubble burst and send Spain reeling into an economic crisis that continued for six long years.

Fuelling the rise in property prices is interest from foreign buyers with 18.7 percent of Spanish property sales or almost two in every ten property sales coming from abroad.

British buyers continue to make up the largest group of foreign nationals buying property in Spain with 7,613 purchases between January and June, an 8.8 percent rise on the same period a year earlier, they now represent 14 percent of foreign investors.

Purchases by Brits have gone up 13 percent since the June 2016 referendum which saw the UK vote to leave the European Union. 

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The bought almost twice as many properties than the French, who were the second largest group (buying 4,211 properties in all), followed by the Germans, and then Romanians. Moroccans were the sixth largest group and the largest non-Spanish nationality outside the EU purchasing 28 percent more than they did a year ago.

The biggest percentage increase in foreign demand came from Morocco, up 28.8 percent on a year earlier closely followed by Ireland (24.7 percent), and the biggest decrease came from Swiss buyers, which dropped 8 percent.

Buyers are attracted by the coast with house sales on the Canary Islands,  Costa Blanca, Costa del Sol and Catalonia all increasing year on year.

Valencia continues to lead the way in terms of house sales with one in three property sales taking place in the eastern region. Second is Andalusia followed by Catalonia and then Madrid, where foreigners bought 4,911 properties, up 5.4 percent.

Foreigners made up 39.4 percent of buyers in the Canary Islands, 35.6 percent in Valencia, 34 percent in the Balearic Islands, 27.4 percent in Murcia, 17 percent in Catalonia and 11.6 percent in Madrid. 

These maps show the biggest groups of foreign buyers by region, with the first showing resident foreigners and the second non-resident foreigners. 


notariado.org

“Foreign buyers play an important role in the Spanish property market. Right now, we're seeing both local demand and foreign buyer demand increase, which is excellent news for the health of the overall market. In terms of foreign buyers, new build homes in sunny, well-established coastal areas are some of the most sought after properties.” said Marc Pritchard, Sales and Marketing Director of Taylor Wimpey España

The latest figures from real estate valuation agency TINSA show a 5.3 percent increase in property prices in the year to October 2018.

Both major city locations and the Mediterranean coastline are faring well, according to TINSA, with rises of 8.5 percent and 6.0 percent respectively.

READ ALSO: Looking to buy a house in Spain? These historical casas are the stuff of dreams

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TAXES

Spain’s deputy PM proposes freezing mortgage rates

Yolanda Díaz, Spain's Deputy Prime Minister and Labour Minister, has called for a freeze on variable mortgage rates amid news that Spain's biggest banks have enjoyed a bumper year of record profits.

Spain's deputy PM proposes freezing mortgage rates

Yolanda Díaz, Spain’s Labour Minister and the ideological force behind sweeping labour market reforms, has called for a freeze on variable rate mortgages following news that some of Spain’s biggest banks reported billions in record profits last year.

On Wednesday, BBVA reported a 2022 profit of €6.4 billion, the largest profit in its history. Driving this profit, the bank’s interest margin grew by a whopping 30.4 percent, commission income by 12.3 percent, and loans by 13.3 percent.

Banco Santander posted an annual net profit of €9.6 billion, up 18 percent from 2021 and higher than forecasted by analysts polled by financial data firm FactSet.

READ ALSO: Banco Santander posts record profit as rates rise

Given these record-breaking profits, especially against the backdrop of a prolonged cost of living and inflationary crisis in Spain, Díaz has said the government must act decisively to “freeze mortgages” and “moderate profits.”

“The crisis cannot be an excuse to earn more,” she said, adding that the rise in the Euribor rate is “very serious”, with the average increase (estimated to be €258 per month) “impossible to bear” for normal Spaniards.

Euribor is the interest rate most often used to work out mortgage payments and calculate both variable and fixed rates.

READ ALSO: What the Euribor rise means for property buyers and owners in Spain

It is anchored to the interest rate set by the European Central Bank (ECB), and, as we are now seeing, quite responsive to global economic events. By the end of January, the rate had risen to almost 3.4 percent, the highest level since December 2008.

“While the rise of the Euribor will increase the average mortgage payment by €250 per month, BBVA’s profits grow by 38 percent to reach €6.4 billion, the largest in its history. The crisis cannot be an excuse to earn more. Freeze mortgages, moderate profits,” Díaz wrote on Twitter on Wednesday January 31st.

Banks respond

Unsurprisingly, Spanish banks are not exactly keen on Díaz’s idea. BBVA President, Carlos Torres, said “I trust what will happen is that the benefits of a market economy continue to be defended”. 

Torres also tried to remind people of the “negative years” that BBVA has endured, with “many billions of negatives”. 

It remains to be seen how persuasive Spaniards or the Spanish government find this comparison, or whether Díaz’s Twitter idea will translate into policy.

Windfall tax

Díaz’s call for a mortgage rate freeze is in line with the Spanish government’s approach to the excess profits of banks and energy companies. In July, the Spanish government introduced a temporary windfall tax on excess profits in order to fund some of the extraordinary measures it was implementing to help the most vulnerable in Spanish society deal with the cost of living crisis.

The government in July introduced a draft bill to slap a temporary 4.8 percent charge on banks’ net interest income and net commissions in 2023 and 2024 to fund measures to ease cost-of-living pressures. Between the new taxes on banks and energy companies, they should generate around €7.0 billion for the state coffers in 2023 and 2024. 

However, in November the ECB published a non-binding legal opinion that suggested Madrid undertake a “thorough analysis of potential negative consequences for the banking sector” of the tax.

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