Foreigners Buy More Real Estate in Spain

September 19, 2012 / Russell Legato, Residential Property Analyst

Foreigners are purchasing real estate in Spain for the purpose of living there. There were 9,502 transactions made in the second quarter of 2012. That reflects a 12 percent growth over the same time period in 2011. It has been four years since such a high number of transactions took place. In 2007 there were 11,130 transactions made by foreigners.

Foreigners Buy More Real Estate in Spain

The increase is favorable and has covered a full year. However, it does not compare favorably to the second quarter of the year 2006 when close to 30,000 were registered. In 2011 there were approximately 5.7 million foreigners living in Spain.

One other factor influenced the current increase. The price of housing dropped. It went down to 1,606 euros, which equals $2,109 per square meter (10.56 square feet). That translates to approximately $200 per square foot. Getting more house for the money is a great motivator to buy.

In the first quarter of 2009 only 5,036 transactions took place. That was a lower point than at any previous time. Location in Spain is relevant too. The majority of transactions in the second quarter took place in Southern and central Spain.  Andalusia had the most and Catalonia the fewest. The Canary Islands had 1,173 sales.

At the lowest end of the scale was Extremadura in West-central Spain with only 18 transactions.

There are Spanish laws that discourage foreigners from buying homes and living as expatriates in the country. The European Parliament objects to the land laws that put holiday getaway homes out of reach of many British citizens.

According to reports, there are loopholes in Spanish law exposing homeowners to having developers seize a portion, and in some cases all, of the property they legally own. Financial atrocities affected British expatriates and those from other countries.

Developers in Spain could legally declare rural land to be reclassified as urban. This gave the developers the right to purchase homes owned by foreigners at a small percentage of actual value. Approximately 15,000 residents from Britain, Belgium, Germany and France have petitioned against the government-sanctioned purchases.

They state that a “grandfather clause” should have protected those who already owned their homes before the law was enacted. At the very least, they should have received full value for the homes they were forced to sell.

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