More foreign buyers, more new properties: two welcome trends of Spain’s housing market

If property experts were asked to name two causes of the last housing crash, the chances are high that they would point the finger at the proliferation of new-build homes and an influx of foreign investors looking to make a quick buck.

There were other mitigating factors of course, but this toxic combination of unscrupulous developers and credit-fuelled and increasingly panicky buyers fanned the flames of folly, expediting the crash and making the landing harder than it had to be…

So one would think that it was with trepidation that the industry welcomed the news this week that both foreign buyers and new-build properties are shaping a growing section of the Spanish housing market.

Not so, as it happens. Things are different this time around. Gone are the days of unsustainable credit. So too are the days when developers would scour Spain for any available patch of scrubland and plant their flag – the pace of new housing developments has slowed considerably from its post-millennium peak.

According to the latest government figures (Fomento), planning approvals were up 57% in the first quarter of the year compared to the same period last year, reaching 16,782.

This figure is the highest for a single quarter since 2011 (when 21,953 approvals were granted), but is a far cry from 2006 when more than 860,000 approvals were granted – divide that figure by four and each quarter was averaging more than 200,000 new approvals.

That is a crazy figure, in hindsight, with Spain adding almost one million new properties in the space of a year. Today’s pace is much more manageable, and will ensure that property prices are kept realistic.

And the steady price rises that this type of market brings have already begun attracting the attentions of foreign buyers, if data from the Council of Property Registrars is to be believed.

The Spanish body has published data this week that reveals a 13% increase in Spanish property in 2015 compared to the year before, with more than 48,000 homes sold to non-nationals last year.

Of that figure, 21% were British buyers, followed by the French, Germans, Swedes and Chinese. Driven by this foreign demand, the Council also confirmed that house prices are also on the up in most regions, posting an average first quarter increase of 6.9% quarter-over-quarter.

And finally, the data also showed that 100,000 properties were sold in 2016’s first quarter – which is the highest figure for 12 straight quarters.