Second homes in Spain: seaside or sierra?
Owning a second home is a widespread practice in Spain. In fact, second homes make up 14.6% of all Spanish housing, this figure exceeding 30% in some provinces. Where are these second homes located? What kind of household owns them? Understanding their distribution throughout Spain in relation to the usual place of residence is of great help in analysing the behaviour of the real estate market at a local level. Once again, we can use big data techniques to process the information and identify more complex dynamics than with traditional methods.
The dream of many Spanish households is to have a second home that can be used at the weekend, for holidays or extended periods each year after retiring, be it located at the beach, in the mountains or the family village. Compared with other similar countries, this custom is deeply rooted in Spain: 14.3% of Spanish households own a second home for personal use, twice the number in France (6.4%) and Italy (7.5%)1 .
Owning a second home does not only mean you can enjoy the services offered by the property (consumption) but, as property is also an investment, it can help households to accumulate wealth, something which can be highly advantageous in retirement. On the other hand, demand for second homes influences the dynamics of the real estate market in zones with a high concentration of this kind of property. We will now look at the prevalence of second homes in Spain, the characteristics of the households that buy them and their geographical distribution.
- 1. Data from the European Household Finance and Consumption Survey (first wave), produced by the ECB. Data from 2010, except for Spain (2008-2009) and Greece (2009). A household is considered to own a second home if it has a property other than the main residence which is used during holidays or for another private use by the household. Property acquired solely as an investment (usually buy-to-let) is not considered to be a second home as it represents the main residence for another household.
Which European countries have the most second homes?
(% of households owning a second prices for personal use)
The second home market started to boom during the 1970s and 80s, coinciding with a notable increase in the standard of living for the middle classes, as well as greater numbers of workers migrating from rural areas to the city (their homes in their original villages became second homes) and the opening up of the Spanish economy (a large proportion of second homes were bought by foreigners).
More recently, growing urbanisation, the increase in time dedicated to leisure and better communications have helped to boost second homes in areas close to major cities, especially Madrid and Barcelona but also in popular tourist destinations (mostly coastal properties but also some locations in the mountains)
There are 3.7 million second homes in Spain, accounting for 14.6% of all housing2
- 2. Data from the housing census (2011). All housing in Spain is classified as main, secondary or vacant housing. The country of residence of the property's owner is not taken into account, so the figures include housing owned by non-residents.
Trend in second homes in Spain
The age, economic situation of the household and GDP per capita of the province of residence are the main factors influencing the decision to buy a second home. For instance, 1 out of every 5 Madrid households has a second home compared with 1 out of every 20 households in Cadiz or Badajoz
We have used the household census from 2011 to analyse the characteristics of households with a second home. Specifically, the main person in the household is asked whether they spend more than 14 nights per year in a second municipality and, if so, about the availability of housing in that municipality3 . The household using the property is not necessarily the owner, although this is the most typical situation for second homes in Spain4 . According to this source of data, 11.7% of Spanish households have a second home.
The age of the main person in the household is one of the key factors determining whether they own a second home. In fact, a marked life cycle can be observed: as from 35-40 years of age, the proportion of households with a second home gradually increases, reaching around 20% of households close to retirement age (65 years). From then on, the percentage of households with a second home starts to fall rather sharply. The 2001 census shows a similar pattern, suggesting the importance of the life cycle in the decision to buy a second home, although it is also true that the generation aged between 60 and 70 in 2011 (50-60 in 2001) are more likely to own a second home whereas later generations tend to have fewer second homes that previous generations at the same age. According to CaixaBank's own data, the average age at which a second home is acquired has risen from 41.6 years in 2009 to 47.6 years in 20195 . This perhaps reflects the greater economic difficulties encountered by young adults at present, as well as a shift in preference regarding leisure (visiting different places rather than spending every summer in the same location, for instance) and use as opposed to ownership.
- 3. The household census concerns people who habitually live in a family home in Spain and therefore does not include nonresidents, even when they own a second home in Spain. In the Real Estate Sector Report on the second semester of 2019, the article «The rise in house purchases by foreigners» was dedicated to analysing sales by non- Spaniards.
- 4. 91.5% of Spanish households that own a second home, according to the 2001 housing census (figure not available for 2011)
- 5. Average age of individuals in the year when they took out a mortgage to buy a second home.
Spanish households with a second home by age and level of education
(% of all households)
The economic situation of households is undoubtedly another key factor as, in general, households acquire their main residence first and only decide to buy a second when they are sufficiently affluent. Although the census does not contain data on household revenue, we have used the level of education as an estimate of income. The chart above shows that the proportion of households with a second home increases with the level of education: only 7% of households with no formal education have a second home compared with 20-25% when they have taken a master's degree or doctorate.
On the other hand, at a provincial level we can also see a clearly positive relationship between GDP per capita and the percentage of households with a second home (either in the same province as their main residence or another). This is particularly the case in Madrid, the second province in terms of GDP per capita and where 21.1% of households have a second home (91% of these in another province). On the other hand, only about 5% of households resident in Cadiz or Badajoz (provinces with a lower GDP per capita) have a second home.
Positive relationship between GDP per capita and the share of households with a second home in Spain
(% of households with a second home)
Most second homes are on the Mediterranean coast. Alicante is the province with the largest number of second homes (326,705 homes, 8.9% of the national total), highlighting the dominance of the Costa Blanca as a tourist destination, both for international and domestic tourists6 . This is followed, albeit at some distance, by Valencia (223,885 homes, 6.1% of the total) and Malaga (170,438 homes, 4.6% of the total).
Other coastal provinces such as Girona, Tarragona, Murcia, Castellón and Cadiz also occupy a notable position in the ranking of second homes whereas the absence of the Canary Islands and Balearic Islands at the top of the ranking is surprising. Perhaps because they are islands and transport from the mainland is therefore more expensive could be the reason why most of the people visiting these archipelagos opt for tourist accommodation rather than owning a second home.
- 6. Data from the housing census which, as already mentioned, does not differentiate between the nationalities of owners.
If we cross-reference the data on the location of the household's main residence and the location of their second home, we can identify the area of influence of each location, a very useful aspect when analysing the dynamics of the local real estate market
A large number of second homes can also be found away from the coast. Ávila, Vizcaya, Soria, Segovia, Cuenca and Guadalajara are the six provinces with the largest share of second homes out of the total homes in each province, all exceeding 30% (more than double the national average of 14.6%). Perhaps the reason for many of these second homes is that their owners originally migrated from rural areas to the city, as mentioned previously.
At the other end of the scale we find the more urbanised provinces (Barcelona, Madrid, Seville, Vizcaya, Álava and Guipúzcoa). In all these the share of second homes is below 7%, as most of the housing in these provinces is used as the main residence.
At a municipal level, the census data show that the smaller the municipality, the larger the share of second homes out of the total. The five municipalities with more than 2,000 inhabitants and the largest share of second homes are Noja (Cantabria), with 91%; Daimús (Valencia), with 76%; Llançà (Girona), with 73.9%; Alcázares (Murcia), with 68.9%, and Canet d’en Berenguer (Valencia), with 68.5%.
The data from the housing census allow us to cross-reference the location of a household's main residence and the location of its second home. We can therefore classify the second home market of each province according to the degree of concentration (or diversification) of the owner's place of residence.
Malaga is a highly diversified destination. In fact, residents from all Spanish provinces have a second home there, especially those from Madrid (24%), Malaga (19%), Cordoba (12%) and Seville (6.7%). On the other hand, Girona, Ávila, Toledo, Segovia and Santa Cruz de Tenerife are highly concentrated destinations; in other words, the households with a second home in these locations come from a small group of provinces. Girona is the most concentrated destination of all due to the large presence of households from Barcelona (75% of the total).
Which province do the people come from with a second home in...?
The same data, observed from a different perspective, help us to identify the most popular locations according to the household's main residence. People living in Madrid, Barcelona and the three Basque provinces tend to choose the most diverse destinations and their second homes are distributed over a large number of provinces. On the other hand, residents from Huelva and Castellón have the most concentrated second homes since almost 70% of households with a second home have this in the same province as their main residence.
The cases of Madrid and Barcelona warrant special attention as their residents account for a third of the second homes in Spain (22% from Madrid and 12% from Barcelona) and, as we have already noted, these are spread all over Spain. The census data, however, do not allow us to analyse any deeper than the level of province and larger municipalities (with over 20,000 inhabitants). This is an important limitation, since second homes are often found in small municipalities (80% of second homes are concentrated in municipalities with fewer than 20,000 inhabitants and more than 40% in municipalities with fewer than 1,000 inhabitants).
Where do the residents of Barcelona province have their second homes?
CaixaBank's own data on mortgages granted to buy a second home offer greater granularity. These maps show the location of the second homes of residents in the provinces of Barcelona and Madrid. It can be seen that the geographical distribution of second homes is far from uniform and, moreover, varies considerably according to the buyer's usual place of residence. For instance, people from Barcelona have many of their second homes in Catalonia (on the Costa Brava, Costa Dorada and in the Cerdanya region) but also in villages in Andalusia and Extremadura. On the other hand, the second homes of those from Madrid are more spread out in Spain, although particularly concentrated in the mountains and on the coast of the Levant region.
Where do the residents of Madrid province have their second homes?
Therefore, the «area of influence» of a given location can be extensive. This has implications for the local property market as the characteristics of second home buyers may differ greatly from those of residents in that area, for instance in terms of their preferences or purchasing power. In this respect, big data analysis allows us to process this information systematically and incorporate it into models that can predict house prices or the number of transactions at a granular level, thereby identifying more complex dynamics than those that can be modelled using traditional techniques.