Foreigners bring some relief to still-grim housing market

Home purchases by foreigners in Spain continued to surge in the second quarter of the year on a back of an ongoing decline in prices in what has become the only bright spot in a market in the doldrums since a massive bubble burst around the start of 2008.

According to figures released Wednesday by the Public Works Ministry, the number of homes changing hands in the period April to June fell 4.2 percent from a year earlier to 80,722. However, over the past 12 months, sales were up 2.3 percent at 345,471 units.

Purchases by foreign residents climbed a record 16.9 percent to 12,546 in the April-June period. Purchases by the foreign community have now risen for the past eight quarters. Sales to non-resident foreigners amounted to 1,086 meaning that foreigners accounted for one out of every six transactions in the quarter.

Sharp falls in prices House prices have now fallen by an average of around 40 percent from their peaks at the end of 2007, but the declines in tourist areas on the Mediterranean coast have been of an even greater magnitude.

Purchases by foreigners were concentrated in Alicante, Málaga, Barcelona, Girona and Tenerife in the Canary Islands. A government scheme to approve the granting of resident permits to foreigners who purchase homes valued at over 500,000 euros is currently before parliament.