Unsurprisingly, there is a lot of economic anxiety around the world at the moment. This comes after Trump’s April 2 announcement of tariffs on every single US trading partner. “Liberation Day”, as he called it, threw the multi-trillion euro global trading system in the air. The uncertainty it created hasn’t subsided – if anything it has grown.
The massive impact of those policies is impossible to measure. The global economy is incredibly integrated, not just in terms of goods but also services. As the focal point of this tumult, the USA will be most affected, but no country will escape its impact.
At the moment, Trump has suspended the across the board tariffs that he was going to apply, including on Spanish trade. There is a “grace period” of 10% tariffs. This is set to last 90 days to allow agreements to be negotiated.
However, over a month has passed and thus far, not a single trade deal has been announced. Even Japan, America’s closest ally in Asia, is publicly rebuking the US’ position. We can expect turmoil to continue at least through the summer.
Back to Spain, the country actually runs a trade deficit with the USA, buying more American goods and services than it sells to the USA. In 2024, this trade deficit totalled $10 billion, with Spain’s export to the USA being about $18 billion and those from the USA being about $28 billion.
The USA is also only Spain’s fifth largest trading partner. As a result, the direct impact on the country is expected to be relatively small. According to a Caixa Bank report:
Overall, the estimated direct impact of the raising of tariffs to 10% would amount to around 1.388 billion euros, equivalent to 0.1% of GDP. In a scenario with a raising of tariffs to 20%, the impact would amount to 3.181 billion euros, or 0.2% of GDP. It should be noted that these estimates only take into account direct exports from Spain to the US.
To put that in perspective, last year the Spanish economy grew by 3.2% and this year it is expected to grow by a still-impressive 2.5%, according to the IMF report from April, 2025.
In addition, the Spanish government moved quickly to establish emergency measures, including a €14 billion aid package to industries and workers who will be affected. Spain is also pivoting towards diversifying its trading partners – seen with summits by the Spanish PM in Vietnam and China.
All that is to the good and there’s reason to be optimistic about the Spanish economy in 2025. But will the impact of all this turmoil cause problems in the real estate sector?
Here, too, I think that there’s reason to be optimistic, for several reasons. On the one hand, the uncertainty, instability and coming economic shocks in America will accelerate the trend of Americans moving to Spain, including to buy homes.
In 2019, the number of property purchases by Americans was 1,089, while by 2024 – before Trump was sworn in and the tariff chaos began – that number had almost tripled to 2,800. As a result, Americans doubled to 2% the percentage of foreign purchased homes in Spain.
What’s more, USA property buyers spend more than anyone else per square metre for property in Spain, at €3,390. That may seem like a high price here in Spain, but in major US cities, you could expect to pay up to four times that price.
And of those places in Spain that are popular with Americans, Costa del Sol is near the top of the list, especially Marbella.
We shouldn’t just look to Americans coming to Spain but also to Chinese citizens buying property here. The number of Chinese buying properties in Spain has grown from 4,370 in 2019 to 5,220 today. That’s nearly double the number of Americans, although the price paid per square metre by Chinese citizens is only ⅔ of what Americans spend.
This speaks to a more general trend not just of Americans visiting and buying homes here. People are also staying away from the USA. Recent stories about Europeans, including young backpackers, getting arrested by border security agents and sent into detention, has chilled the climate for European tourists.
In March, before the tariff hit, the number of Europeans traveling to the USA had already dropped by 17%. The number of foreign tourists in general had declined by 12%. Many of those tourists will stay in Europe and many will come to Spain.
More high-spending tourists coming to Spain – which is the typical profile of a European family that can afford to vacation in the USA – is not only good for the Spanish economy. It also means more interest in Spanish property, especially on the coasts.
Prior to everything currently unfolding, the Spanish real estate market was already vigorous, especially compared to other EU markets.
Spanish population is growing as the country bucks the EU trend towards restricting immigration. 2024 saw population growth just under one percent, at 450,000 new residents. That translated into the creation of close to 112,000 new households.
Although new home building permits are finally rising – after stagnating for a decade – there is still a gap to be filled between supply and demand. As a result, prices continue to rise at rates above inflation; last year Spanish real estate prices rose by almost 6%.
However, that price increase isn’t spread evenly across the country. Some regions and even cities had very different price growth rates. Malaga province saw price increases approaching 14% and the city of Malaga had a whopping 22% increase in the price of real estate.
Nonetheless, it should be said that, according to a study by Caixa Bank, 2024 was the first year in many years in which new construction permits exceeded the number of new households formed. This is a good sign. It represents a 16.5% increase in the number of permits, year over year.
Expect this to gather pace as the ECB continues to ease interest rates over the coming year, likely bringing mortgage rates back down to around 2%.
The overall picture for both the Spanish economy and real estate market remains positive. Spain has one of the lowest exposures to US trade in Europe – half the EU average. The government moved quickly with policy action to counter the negative effects and was already looking to diversify trade partners before Hurricane Trump hit.
If the current storm is managed well, Spain could even come out ahead in the end, as a European leader in a reoriented world trade order. That would bode well for a recovering new build housing market. Fingers crossed.
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