Over the last 12 months, purchases of housing as an investment represented 10% of the total sales transactions made in Spain. Sales of property for investment now make up the same amount as those transactions to purchase a second home, which also number 10% of the total. For comparison, the purchase of property for the purpose of a primary residence accounts for 78% of the total transactions.
Of those who purchased their property as an investment, 70% purchased with the intention of offering the property for rent on a long-term basis. The main reason stated was for the high profitability that this type of rental offers to owners.
“The profitability of housing at the moment is quite high in Spain and stands, on average, at 5.2%, according to fotocasa data. Therefore, there are many homeowners who consider that buying a home for rental gives a high return that no other financial product can match right now. This explains why 70% of investment buyers have acquired property for this reason,” explained Ismael Kardoudi, director of Studies and Training at Fotocasa.
In addition to offering property for long-term rental, 15% purchased housing with the intention of offering it for short-term or holiday rental, while another 15% do not intend to rent their property at all. Those who said they would not offer their property for rent said this was due to the risk of non-payment of the rent on the part of the tenants.
More Old Than New
Of the buyers who purchased for investment, 82% purchased a second-hand property, while only 18% purchased a new property. Additionally, in most cases the house purchased was in the same town as their primary residence, although in a different neighbourhood in 34% of cases. 27% were in the same town and in the same neighbourhood, while 15% bought in a different town.
Regarding the time it took to find investment housing, in 21% of cases it took between six months and one year, 20% took between four and six months, while another 20% took between two and four months. In 13% of cases it took between one and two years to find a suitable property, while another 4% took more than two years to find the home to buy as an investment.
Who buys housing as an investment in Spain?
In the last year, those active in the real estate market that bought housing as an investment were 59% men, with an average age of 45 years, with great purchasing power (mostly with monthly income between €5,000 and €8,000) and in 50% of cases they live with their partner and children.
Additionally, 75% already own a property. Of these, 35% own a single home, 33% own two homes, 11% have three homes and 22% already own more than three homes.
Looking at prices, people who have bought housing as an investment consider that the prices of rentals at the moment are very expensive (63%) and 28% say that it is somewhat expensive. And regarding the purchase prices, 38% believe that prices are very expensive and 45% say they are somewhat expensive.