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Foreign Home Buyers Attracted by Falling Prices in Spain

 

According to the College of Property Registrars real estate statistics register for the first quarter of the year, foreigners are continuing to buy homes in Spain, attracted mainly by the declining prices, of up to 30.30% from their peak levels of 2007. These house prices are now back at 2003 levels, after falling a further 2.32% in the first three months of this year.

From January to March, sales of homes increased by 28.72% compared to the previous quarter, reaching a total of 100,768 transactions, which is the best result of the last eight quarters, although it must be kept in mind that the Registrars’ data actually reflect sales made one or two months earlier. Thus, this increase in transactions at the start of 2013 does not mean that the market has recovered this year, but corresponds to the increase in purchases in the final stretch of 2012, ahead of the abolishment of the tax relief for home purchases, which came into effect from 1st January. In fact, according to experts, the months of January and February are usually pretty bad for home purchases.

The statistics show that 8.63% of the sales transactions in the first quarter were made by foreigners, exceeding the 8.12% of 2012. These figures puts the purchase of homes by foreigners next to the records set in 2006, of 8.97%, before the bursting of the housing bubble, and far from the 4.24% registered in 2009, in the middle of the property crisis.

By nationality, the British are those who most invest in the Spanish property market, accounting for 14.90% of the total foreign purchases, followed by the Russians, with 9%.

Cinco Dias reported that, at a time when domestic demand is at a standstill, and before the recovery of foreign demand (also reflected in the latest data from the Ministry of Public Works, which shows that property acquired by foreigners has increased by 5% and accounted for 15% of the total), the Spanish Government has approved a new draft law for entrepreneurs, which is to grant residency permits to foreigners who buy homes worth more than 500,000 euros, in an attempt to encourage investment in Spain, create jobs and reduce the high stock of unsold homes.

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