Spanish Property Market. Who Buys and Why?
The Balearic Islands saw a healthy growth in the property market during 2017 with the sale of real estate in the islands reported to have increased by 23% compared to 2016. The upward trend has continued into the first months of 2018 and shows no sign of decline in the foreseeable future, but who is buying Balearic property and for what purpose?
If we consider ‘demand’ the increase, it has come both from local sources and, to a heightened degree, foreign investors. The impact on the Spanish property market of Brexit was not nearly as severe as initially feared and British investors have retained their status as the primary customer, at least in terms of volume. With regards to value, however, UK buyers are looking toward more affordable properties due to a reduction in spending power and a weaker sterling.
Interestingly, the most significant rise in interest has come from Denmark where a leading property website reported an increase of almost 50% in Danish visitors. The same website also saw visitors from the US increased by 41.1% and those from Sweden by 34.5%. British interest is still the keenest though with the UK currently making up 27.4% of total visits to the site, against 62.3% from the rest of Europe and 10.3% from the rest of the world.
When considering property purchase, potential returns on long term investment depend on a continued rise in house prices and, in this area, Ibiza and its neighbouring islands really come into their own. A leading property portal listed average prices in Ibiza town as showing an annual growth rate of 28%. Rentals are also very much in demand with average rental prices in Ibiza Town showing an increase of 18%. Brexit has also had little, long term impact on house prices throughout Spain. The latest year on year figures did show a decrease of 0.1%, however, the quarterly trend is 1.1% up, which would seem to be a positive indicator.
Comparing locations throughout Spain it appears that coastal regions are recording the highest rise in house prices with areas around Alicante and Malaga seeing values rise by around 10%, whilst Mallorca has seen an impressive 21.3% hike in values. At the other end of the scale, Barcelona has seen a slight fall in prices of around 3%. This would tend to suggest that buyers are looking for second or holiday homes, whether for personal use or with the intention of generating revenue from rental.
Certainly from the latest figures it would seem that, despite economic uncertainty, the international housing market in Spain has maintained a healthy growth. The latter quarter of 2017 saw 24,275 international sales, which was up more than 13% on the previous year. International sales now represent over 17% of total house sales in the whole of Spain and Ibiza is at the forefront of this growth, enjoying, as it does, all the important attractions sought by overseas, real estate investors.
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