Foreign buyers push Spanish home sales to record 16% amid record prices

The property market has reached record highs in prices and foreign purchases (16.05%), while sales and mortgages have fallen for a third straight quarter, signalling a slowdown in activity.

The presence of foreign buyers in the property market keeps growing. During the third quarter of the year, their transactions accounted for 16.05% of all home sales, the highest share since records began. In absolute terms, more than 26,300 transactions were completed, according to the latest data published by the College of Registrars.

More than half of these purchases, specifically 54.7%, were made by citizens of the European Union, while a further 17.8% corresponded to buyers from the rest of Europe.

By nationality, British buyers topped the ranking, with 7.5% of all purchases made by foreigners. They were followed by Moroccan citizens, with 6.4%, and Dutch buyers, with 5.8%.

The weight of international demand was particularly significant in island and Mediterranean markets. The Balearic Islands led the table, with 37.2% of sales in foreign hands, followed by the Valencian Community, with 30.4%. In the rest of the autonomous communities, this share was below 30%.

House prices hit new highs again

The residential market continues to show strong upward pressure on prices. The College of Registrars' Repeat Sales House Price Index recorded a year on year increase of 15.8% in the third quarter, while compared with the previous three months it rose by 5.2%. Both movements took the index to a new all time high.

The average home price reached 2,512 euros per square metre. By type, existing homes stood at 2,462 euros/m2 after posting a quarterly increase of 0.6%. New build homes reached 2,701 euros/m2, with a rise of 2.5%.

Despite these figures, the evolution of average prices points to a moderation in the pace of growth. According to this methodology, the increase was 1% on a quarterly basis and 9.3% compared with the same period a year earlier.

By autonomous community, Madrid recorded the highest average price, at 4,565 euros/m2, followed closely by the Balearic Islands, at 4,502 euros/m2. Next came the Basque Country (3,693 euros/m2), Catalonia (2,989 euros/m2) and the Canary Islands (2,850 euros/m2).

The ranking by provincial capitals once again puts San Sebastián in first place, with 6,662 euros per square metre. Madrid is in second place, with 5,597 euros/m2, followed by Barcelona (5,124), Palma (4,408) and Bilbao (3,877).

Home sales fall for the third consecutive quarter

Against the backdrop of rising prices, activity in the residential market is starting to show signs of cooling. During the third quarter, home sales fell by 5.9% year on year, according to the registrars' data.

The comparison with the previous quarter is also negative. Transactions fell by 2.3%, marking three consecutive quarters of declines. Between July and September 164,148 sales were recorded, the lowest volume in the last nine quarters.

By segment, new build homes accounted for 34,611 transactions, 0.9% fewer than in the previous quarter. Existing homes generated most of the activity, with 129,537 transactions, although they also saw a drop of 2.6%. Quarterly declines spread across ten autonomous communities and 27 provinces.

Mortgages also fall in the third quarter

Mortgage financing followed a similar trend. Between July and September, 124,145 mortgages on homes were registered, a quarterly reduction of 3.9%. This figure is equivalent to 75.6% of all home sales recorded during the period.

However, the balance for the last twelve months remains positive. In that time, 519,388 mortgages on homes were taken out, 6% more than in the previous twelve months.

Andalusia recorded the highest number of mortgage transactions in the third quarter, with 23,635, followed by Catalonia with 23,268. The Community of Madrid registered 18,240 transactions and the Valencian Community 15,692.

As for the mortgage amount per square metre, Madrid was again in the lead, with 3,158 euros/m2. The Balearic Islands were in second place, with 2,987 euros/m2, followed by the Basque Country (2,392) and Catalonia (2,248).

The data depict a property market marked by an apparent contradiction: while prices continue to break records and foreign demand becomes more prominent, the number of sales has been falling for several quarters.