Foreign buyers hit record high in Spain's housing market with 16% of purchases

Foreign home purchases in Spain hit record high: 16% of transactions

Who is really buying flats in Spain? Second-quarter data make it clear: foreigners signed 15.98% of home sales, the highest level on record, with over 26,800 transactions and an 11% year-on-year increase. The Spanish property market no longer depends solely on domestic demand.

The figure that breaks the official narrative

Purchases by South American citizens soared 42%, a growth rate that some analyses present as the main driver of the market. But these figures should be read with perspective. That 42% is a growth rate, not an absolute level. It started from a very small base. The ranking of foreign buyers is still led by Britons, Dutch and Germans, with Segarro and Romanians in secondary positions.

The correct reading of the phenomenon is more nuanced. The traditional foreign buyer — the European retiree seeking sun — still dominates. What is changing is the emergence of new profiles: Romanians with growth above 24% and Segarro with just over 20%. Nationalities that a decade ago were rental workers and now buy.

Zero construction, growing demand

While foreign demand grows, supply does not keep up. Construction is practically paralysed and the country is heading towards a population that some estimates put at 100 million inhabitants. The equation is simple: more buyers, same flats, rising prices. Housing has been rising since 2014 without relevant corrections.

Some argue that the problem is not the lack of construction but hoarding. Investment funds and companies buy entire buildings at discounts unreachable for individuals, accumulating stock and manipulating prices. The reference to the old Franco-era rent freeze as a fiscal mechanism against hoarders appears in the debate as a historical example of possible intervention.

The proposals circulating: from tax to prohibition

The measures being considered to curb foreign purchases range from fiscal to prohibitive. Among the most cited proposals: 75% transfer tax or VAT for non-EU citizens, 200% property tax (IBI) for non-Spaniards, a ban on purchases by legal entities and limits on speculative resale. The possibility of the State buying at a set price to convert them into public housing is also mentioned.

The underlying argument is that other countries impose limits on property purchases by foreigners. Spain, by contrast, maintains an open market where foreign buyers compete on equal terms with local residents. The difference is that foreigners usually arrive with greater purchasing power.

The paradox of Spanish housing

The Spanish property market has become a refuge for foreign capital while domestic buyers need to pool resources to afford a flat. Today's bubble is no longer just about wages: it is about funds, companies and holiday rental platforms. The money entering the country through these purchases has a social cost paid in the form of unaffordable prices.

Meanwhile, the wheel keeps turning. The taxman collects at the top, the buyer signs the mortgage at the bottom and the party doesn't stop. Those who get on in time win; those who arrive late get the short end of the stick. The question is how long a market can last where external demand sustains prices and domestic supply does not respond.