Foreign investment in Spain’s housing market in 2013 was the highest for nine years, at €6.45 billion (US$8.95 billion), up 16% on the previous year, according to the Bank of Spain.
British nationals were the biggest buyers with 15.1% of total foreign residential property purchases. The French bought 9.84%, the Russians 8.58%, and Belgians with 7.26%.
Foreign investment helped the rate of house-price falls slow to 7.8% last year, compared to a price decline of 15.1% in 2102. Spanish home prices are now declining by only 4.1% per annum. But sales of new housing units fell by 37.4% year-on-year to February, according to the National Institute of Statistics.
Spain, Europe’s fifth-largest economy, has witnessed a drop of up to 40% in home prices since 2007. Due to restricted credit, withdrawal of tax benefits, and rising unemployment, it is becoming increasingly difficult for locals to buy properties.
Half of all households in Spain have some sort of debt, the average debt being €42,900. Young families are especially burdened: 81% of young families, i.e., where the main bread earner is under 35 years old, have property-related debts. About 584,000 dwellings are vacant in Spain, waiting to be sold.
While domestic buyers are bearing the brunt of the slowdown, the Spanish government is promoting inward foreign investment. Spain started issuing residency permits to non-EU nationals in February, in return for real estate investments of €500,000 ($670,000) or more.