Demand for Spanish properties among foreign buyers continues unabated in 2023, following a 30 percent increase in demand among non-Spanish buyers in 2022, according to Spanish valuation and appraisal company Euroval.
While domestic buyers will take out fewer mortgages in 2023, deterred by high variable and fixed interest rates mortgagesForeign buyers are the driving force of the Spanish property market and one of the reasons why property prices are not falling despite there being less demand overall in Spain.
What profile do these foreign property buyers have?
According to Spanish property search giants Idealista, UK nationals represent the foreign group applying for the largest number of mortgages in Spain, accounting for 18.8 percent of the total in the second quarter of 2023.
They were followed by Germans (14.2 percent), Swiss buyers in third place (9.5 percent) and American property seekers in fourth place (8.4 percent).
Other important groups of the foreign population applying for Spanish mortgages are Dutch (7.6 percent), French (6.9 percent) and Irish (5.5 percent) nationals.
Their average monthly income is 5,933 euros, well above the average gross salary in Spain, which in 2023 will be 1,714 euros per month per employee, or 3,277 euros per household.
American and Swiss buyers have the highest disposable income, with an average monthly salary of more than 9,000 euros.
These high-income foreigners want to buy a house in Spain that costs an average of 210,000 euros, according to the Idealista study, although Swiss, German and American buyers with higher incomes look for homes that are in the range of 240,000 euros.
Spaniards, on the other hand, currently buy homes that cost an average of 175,000 euros.
The mortgage loan requested by foreigners is 151,2000 euros on average, and the richest property seekers in Switzerland and the United States obtain mortgages in the range of 175,000 to 180,000 euros.
Therefore, foreigners on average request mortgages for around 70 percent of the property value, in line with what most Spanish banks are willing to offer.
In the second quarter of 2023, 72 percent of mortgages approved for foreigners in Spain were fixed-term, 25 percent were mixed and only 3 percent were variable.
Where do foreigners get mortgages in Spain?
The Spanish region of Valencia, which covers the Costa Blanca, remains the preferred area for foreigners to buy property in the country, accounting for a third of mortgages in the second quarter.
Andalusia (21.3 percent) and Catalonia (14.1 percent) are the second and third favorite regions of foreigners buying homes in Spain.
Madrid and the Balearic Islands are the regions where foreign buyers are requesting the largest loans, around 200,000 euros, while non-Spanish people with mortgages in Murcia and Aragon are requesting the smallest loans, below 100,000 euros.
As has always been the case, foreigners often prefer to have a home on the Spanish coast, but this can be considerably more expensive.
In fact, buying a Spanish property that is not in a popular tourist area is currently 75 percent cheaper, the biggest difference in ten years, Caixabank Research reported at the end of July.