Against All Odds

British people still love Spain, against all odds. British buyers have changed a lot in Spain’s property market since 2007. They used to be the biggest foreign buyers. Now their share has dropped and their reasons for buying have shifted. Two major events hit British buyers hard. The 2008 financial crisis caused a sharp drop in purchases. The Brexit referendum in 2016 made things worse and changed where British people chose to live.

But Spain still attracts British buyers. They show strong interest in luxury homes and permanent moves. This happens even as Britain’s overall market share falls. Other foreign buyers are becoming more active.

The Spanish government is making changes. They ended the Golden Visa program. They plan new taxes on non-EU foreign buyers. These moves aim to help local housing needs and control tourism effects.

Spain’s property market now draws buyers from around the world. This makes it stronger, more stable but more complex. Traditional buyers like the British face new challenges…

Pre and post 2008 Boom

Prior to 2007, Spain’s housing market experienced an extraordinary boom, with real estate prices surging by an impressive 200% between 1996 and 2007.1 This period was marked by massive construction, with an annual average of 600,000 new homes built from 2000 to 2007, a figure that, for some years, exceeded the combined new construction in Germany, France, the UK, and Italy.

In 2007, foreign buyers collectively accounted for 7.3% of all property transactions in Spain, totalling 57,674 purchases.

 Among these foreign nationalities, the British were the clear leaders, securing a substantial portion of the foreign market, reaching as high as 38% of all foreign buyers in 2008.

The subsequent bursting of Spain’s property bubble, significantly exacerbated by the 2008 global financial crisis, led to a severe market correction. Construction activity plummeted, with an average decline of 25.3% between June 2007 and June 2008, and the broader Spanish economy faced a sharp increase in unemployment and widespread corporate bankruptcies. This period marked a fundamental shift in the market.

For British buyers, the market contraction was particularly pronounced. By 2023, the volume of property purchases by British nationals remained almost 40% below their 2007 levels.5 The financial downturn was compounded by a significant weakening of the British Pound against the Euro. The average GBP/EUR exchange rate dropped from 1.46 in 2007 to 1.26 in 2008, hitting a low of 1.12 in 2009.

This currency depreciation directly reduced the purchasing power of British buyers, making Spanish properties, even with falling prices, comparatively more expensive in sterling terms. This combination of a collapsing property market and unfavourable exchange rates created a challenging environment for British investment and demand.

Recovery and the Brexit Impact:

Following the depths of the financial crisis, the overall foreign property market in Spain began a gradual recovery around 2012. Buyer numbers showed a consistent year-on-year increase, a trend that largely continued until the onset of the COVID-19 pandemic in 2020.

Throughout much of this recovery, British buyers maintained their position as the largest group of foreign purchasers, even reaching a peak market share of over 21% of all foreign transactions in 2015.

However, the 2016 Brexit referendum introduced a new layer of complexity and uncertainty for British citizens interested in Spain. The referendum result led to significant regulatory ambiguity and further currency volatility, with the GBP/EUR exchange rate notably dropping from an average of 1.3782 in 2015 to 1.2233 in 2016.

This period saw a noticeable “decoupling” effect where, despite sustained high levels of online search interest for Spanish property from the UK, actual transaction volumes experienced a significant decline. This suggests that while the desire to purchase property remained, the political and economic uncertainties translated into a reluctance to commit to actual transactions.

By the second quarter of 2019, British buyers, despite still leading in terms of nationality, recorded their lowest share of foreign purchases in the historical series, at 13.31%.

This indicated a steady erosion of their market dominance even before the full implications of Brexit were felt. The COVID-19 pandemic in 2020 further amplified this downward trend. Non-resident foreign purchases declined by over 25%, with British buyers experiencing an even sharper contraction of nearly 30% compared to 2019 levels.

The period following Brexit highlighted a clear divergence in the British property market in Spain. The introduction of the 90/180-day rule within the Schengen Area for non-EU citizens, including Britons, significantly reduced the practical utility and appeal of owning a second home for short-term, discretionary use.

This directly contributed to a sharp decline in purchases by non-resident buyers. Conversely, British expatriates already residing in Spain or those committed to long-term relocation were driven by more fundamental factors such as a milder climate, lower living costs, and an improved quality of life.

 Their property purchases were often for primary residences or long-term investments, making this segment of the market more resilient to the mobility restrictions and uncertainties affecting short-term visitors. The observed “decoupling” between online search interest and actual purchases underscores how regulatory barriers and financial uncertainty can override initial interest, leading to a shift in the profile of British buyers.

2021-2025

In recent years, British buyers have continued to represent the largest foreign nationality by volume of purchases. In 2022, they accounted for 11.07% of all foreign buyers. This trend continued into 2023, with 12,470 purchases5, and the first half of 2024, recording 5,864 purchases, representing 8.4% of total foreign transactions.

However, their share of the total foreign market has continued its downward trajectory, plummeting from a peak of 21.9% in 2015 to 8.37% in Q2 2024 4 and 8.6% for the full year 2024.

 This marks the lowest share on record for British buyers, indicating a significant reduction in their overall market dominance.

A notable trend is the clear divergence between non-resident and resident British buyers. In 2024, 60% of British purchases were made by non-residents (7,161 units), while 40% were by expats living in Spain (4,751 units).While both categories experienced year-on-year declines in H1 2024, purchases by expats demonstrated remarkable resilience, showing a 2.87% increase compared to their ten-year average. This stands in stark contrast to a 15.25% decline for non-residents over the same period.

This highlights the stability of demand from British individuals who have made Spain their permanent home, driven by long-term lifestyle choices rather than short-term holiday or investment opportunities.

Despite the overall fall in transaction volumes, British buyers who remain active in the market continue to demonstrate strong purchasing power. In 2024, they paid an average of €2,271 per square metre, a 10% increase from 2023.This suggests that the remaining British buyers are often targeting higher-value properties, likely in the luxury or premium second-home segments, indicating a concentration of significant capital within this buyer group.

The Spanish government has recently implemented significant policy changes that will further shape the foreign property market. The Spain Residence by Investment Program, widely known as the ‘Golden Visa’, which granted residency for a minimum property investment of €500,000, was officially terminated on April 3, 2025.17 This eliminates a key pathway for high-net-worth individuals from non-EU countries, including the UK, to obtain residency through real estate.

Furthermore, there is a notable proposal by the Spanish Prime Minister to potentially increase the tax rate for non-EU non-residents buying property to 100%, with the explicit aim of prioritising housing for Spanish residents.While this remains a proposal and has not yet been enacted into law, it signals a substantial policy shift.

The continued reduction in the British market share, even as they maintain the highest volume of foreign purchases, signifies a fundamental transformation away from historical British dominance towards a more diversified foreign buyer base.

 Spanish government efforts to restrict short-term rentals, as well as what it deems speculation by non-eu, non-residents, could fundamentally alter the market for foreign buyers, particularly non-residents, potentially making Spain a less attractive market for purely investment or short-term holiday purposes. This could lead to a further reduction in the non-resident British buyer pool and a re-shaping of the overall foreign market, favouring long-term residents or domestic buyers. The Spanish government’s actions reflect a strategic response to internal social pressures, shifting away from policies that previously incentivised foreign investment, as these are now seen as contributing to rising property prices and reduced affordability for locals.

Beyond economic and political factors, the fundamental appeal of Spain’s lifestyle and quality of life continues to be a powerful draw for British nationals. The prospect of a milder climate, lower living costs, and an improved quality of life remains a primary motivation for many British buyers, particularly retirees and those seeking long-term settlement.9 This enduring appeal explains the relative resilience of the British expat market, even amidst the challenges posed by Brexit and other external factors. The desire for a better work-life balance and the increasing prevalence of remote working models also contribute to Spain’s attractiveness as a permanent or semi-permanent residence.3