Should You Buy Property in Spain Now?

Purchasing real estate in Spain has long been a dream for many — especially along the stunning Costa Blanca. But with prices climbing and a policy on the horizon targeting non-EU buyers, is now the right time to invest?

🇪🇸 The Current Market Situation

• Record foreign investment: In Q1 2025, 43.7% of housing purchases in Alicante province were made by foreigners — the highest ratio in Spain, surpassing Málaga (34.8%) and the Balearics (30%)

• Price surge: Coastal property values in the region have jumped almost 40% since 2020, as demand outpaces new construction

🏦 Why Now Might Be the Right Moment

1. Interest rates remain historically low – making mortgages more affordable.

2. Strong projected rental returns, particularly in tourist hubs and golf communities.

3. Stable economic environment: Spain’s GDP growth and moderate inflation support long-term real estate value

🚨 Upcoming Policy Alert

The Spanish government is now considering a 100% tax on non-resident, non-EU property purchases, aiming to ease housing pressure. For non-EU buyers, this could double the effective cost of acquisition if enacted, though approval is still pending.

Essential Steps for Foreign Buyers on the Costa Blanca

✅ 1. Prepare Your Documents

• Obtain a NIE (foreign tax identification number).

• Open a Spanish bank account.

💸 2. Budget Realistically

• Besides the purchase price, set aside +10–15% for taxes and fees:

  • Transfer Tax (ITP) 6–10% for resale homes, or 10% VAT + AJD for new builds.

  • Notary, land registry, legal fees (~3%)

• Provide proof of funds and declare the money’s origin.

🏠 3. Use Local Experts

• Engage a bilingual real estate lawyer to:

  • Confirm clean title, no debts, or burdens.

  • Check building permits, community dues, and compliance.

• Hire a technical surveyor to inspect structural issues (e.g., aluminosis in pre-1980s buildings)

📝 4. Navigate the Purchase Process

1. Sign a reservation agreement, often accompanied by €3–6 k deposit.

2. Lawyer conducts due diligence on documentation, taxes, encumbrances.

3. Sign a preliminary contract with a 10% payment.

4. Finalise sale before a notary, register the deed, and pay remaining taxes

🏡 5. Think Post-Purchase

• Non-resident owners must file annual income tax and local IBI property tax.

• Renting? Short-term rentals require a tourist licence and come with higher tax rates for non-residents.

Why Costa Blanca Makes Sense

• It boasts the highest share of foreign buyers in Spain.

• Offers a diverse market: beachfront flats, urban villas, inland rustic properties.

• Proven rental performance thanks to tourism and demand from retirees and digital nomads.

Red Flag: Speculation Bubble?

Given the rapid price growth and heavy foreign investment, Alicante’s market resembles a bubble — though current demand, limited supply, and controlled lending practices differentiate it from past crises . Still, proceed with care.

Key Takeaways

• Buying now may allow you to lock assets before major price hikes or new taxes hit.

• Be prepared: NIE, financing, legal counsel, and technical inspections.

• Engage professionals to ensure transparent and secure transactions.

• Future-proof your investment by considering tax implications and rental regulations.

How SGM Abogados Can Help

At SGM Abogados, with offices in Benijofar and San Javier, we specialise in guiding foreign clients through every step of Costa Blanca property acquisition. From NIE applications to deed signing, due diligence, mortgage assistance, and rental licensing — we offer seamless legal support in many languages and of course Spanish.

📩 Ready to make your move? Contact us for a free initial consultation and personalised guidance.