Adam Neale (Columnist)
IN a recent article, newspaper El Confidencial questioned whether there is a problem with foreign home buyers occupying more of the market than ever, without being interested in new-build homes. The publication confirmed that overall interest among international buyers is high, with 53,359 transactions registered in the first quarter of 2018.
Some 33,000 homes were sold to foreign buyers in the first half of 2007, just before the property bubble burst. This would suggest we’re at an all-time high.
But, according to the article, sales of new homes to foreign buyers are at an all-time low across Spain, despite more new projects reaching the market all the time. This means there is increasing competition among modern property developments, and this proliferation of choice may be one of the reasons why they don’t sell as quickly as before.
Property Prices are a contributing factor
Another factor is the rise in property prices, which due to limited land and growing construction costs, have increased significantly and more rapidly than those of resale homes. The latter are now seen to offer a lot more home for your money.
Therefore there has been a notable shift towards resale properties in recent times, and especially in relation to the pre-recession years, when over 60% of all property transactions involving non-Spanish buyers were new. So, while demand is strong many experts worry about the lack of appetite for new homes.
Planning delays are another contributing factor
A greater worry is the added time and cost caused by building licences delays and maybe this is a frustration that potential buyers feel as well, prompting them to opt for the easier choice of a resale property ready to move into. There are currently around 200 new projects on the Costa del Sol alone, but if the reports are correct the new flow of developments should begin to slow down considerably.
The British, who have always been keen buyers of both resale and new homes in Spain, have seen their share within the foreign buyers’ market drop considerably since Brexit. Where once they made up over half of the total, that share has now fallen to less than one-fifth, and this can be another explanation for the lack of interest in modern properties. The state of the overall market is healthy thanks to a revival of the domestic market and strong demand from especially Scandinavian, Belgian and French buyers, but right now it’s clearly focused on resales.
