Wednesday, December 18, 2024

Why Spain is experiencing a property boom – while the rest of Europe crashes

Must read

“It’s tricky to get financing for projects – developers have to put up a lot of capital,” Mr Stücklin said. “Banks don’t want to lend to developers, you have to have very good numbers.”

Tight supply and booming demand have contributed to a domestic housing crisis that Spain’s socialist government has been trying to address.

In tourist hotspots such as the Balearic Islands – which include Mallorca – locals say they are being priced out of living in their own home towns.

In April, Prime Minister Pedro Sanchez announced that the “golden visa” scheme that grants residency to foreign property buyers – including Britons – would be axed.

He said the move would make access to affordable housing for Spaniards “a right instead of a speculative business”.

The number of expats using the scheme is a tiny fraction of the overall numbers buying up property on the Spanish coastline and the big cities.

In reality, the move was a political gesture reflecting the anger of Spaniards who cannot afford to buy – or even rent – in a booming market.

Empty Spain

House price growth at a national level masks a more complicated regional picture.

The irony is that Spain was left with a glut of houses after the financial crisis, and is now in desperate need of more. The problem, according to Mr Stücklin, is that many of the properties were built in the wrong place.

In what Spaniards call la España vacía (empty Spain) – the agriculture-reliant regions in the country’s vast interior, including Castile and León, Castile-La Mancha, Extremadura and Aragón – many houses still lie empty.

As Spain’s metropolitan centres and tourist hotspots have flourished, these areas have been left behind, and their inhabitants, especially the young, have migrated to the cities.

Just 10pc of Spain’s population inhabits 70pc of the country, and 40pc of towns are at risk of depopulation, according to a University of Barcelona study.

Mr Stücklin said: “Throw a dart in a map of Spain and there’s a good chance you’ll hit somewhere where villages are being abandoned.”

House price growth has been considerably weaker compared to the parts of Spain popular with foreigners.

“If you want to buy in Madrid, the Balearic Islands, Barcelona, Marbella, parts of the Costa Brava, the sellers have the whip hand.

“There’s loads of local and international demand in these regions, but also vast swathes [of Spain] where you’d struggle to find a buyer.”

Latest article