Spain's shifting property policies and evolving consumer habits

Recent developments in Spain reveal the government’s intensified focus on regulating foreign property purchases and shifting perceptions of house brands among Spanish consumers.

Foreign property buyers from affluent Western nations are increasingly feeling the pressure from Spanish authorities. The reasons behind this sentiment are becoming more apparent.

In April, Prime Minister Pedro Sánchez’s administration dismantled the golden visa residency scheme, which previously granted non-EU nationals Spanish residency in exchange for purchasing property valued at €500,000.

Recently, the ruling Socialist Party officially proposed a 100 percent tax on non-EU non-resident property buyers, effectively doubling the financial burden on those seeking homes in Spain.

Moreover, authorities in the Canary Islands and the Balearic Islands have suggested imposing limitations on foreign property ownership, fueling further debate.

The most radical proposal came from the Catalan separatist party ERC, which suggested that foreign residents must apply for a permit to purchase property unless they have resided in Spain for a minimum of five years. This proposal was initially rejected by Spain’s Congressional Housing Committee in late April but is now being revived in Catalonia.

Under this initiative, foreigners intending to buy a home would need to demonstrate their eligibility by applying for a permit from the regional housing department where the property is located. The criteria would include proving five years of continuous residence in Spain, thereby excluding those with temporary resident cards from home purchases.

This proposal is set for debate in the Catalan Parliament next week. ERC MP Mar Besses emphasized, “You can’t have a situation where a firm on the other side of the world buys real estate for speculation.”

Elisenda Alamany, ERC’s Secretary General, argued for the proposal, stating, “We want people who buy to show their commitment to the city (Barcelona), as it’s the way to guarantee our identity and communal lifestyle.”

While both points from ERC members are valid and comprehensible, they appear to target investment companies rather than temporary residents who wish to buy homes. One must ponder whether the residency of these individuals in Catalonia and their desire to purchase property can genuinely be labeled as “speculation.”

As seen in the ongoing crackdown on Airbnb listings in Spain, the distinction between large businesses motivated solely by profit and individuals owning one or two properties is becoming increasingly blurred.

In another realm, the perception of purchasing Mercadona’s Hacendado house brand has undergone a significant transformation. Not long ago, choosing these products was often viewed as a reflection of one's socioeconomic status.

Many believed that if these house brand items were less expensive, they must be inferior in quality. This mindset, although flawed, was prevalent among consumers.

Fortunately, a combination of necessity and evolving attitudes has led Spanish shoppers to discard these biases. According to a study conducted by Kantar for the Spanish business daily Expansión, Spaniards now purchase 20 percent more house brands than in 2003, accounting for 44 percent of their grocery shopping.

Some supermarkets report even higher percentages: Lidl (82.1 percent), Mercadona (74.5 percent), Carrefour (40 percent), and Día (57 percent).

Interestingly, this shift in consumer behavior transcends mere economic constraints, although rising living costs have certainly played a role. Supermarkets in Spain have developed a premium differentiation strategy for their own brands, disrupting the longstanding dominance of major name brands.

Today, the house brand is no longer regarded as “the worst option” but rather as “the cheapest option,” a change in perception that has considerable implications.

However, there is a downside to the improved reputation, appearance, and quality of house brand products—they have become more expensive. Yet, in an evolving market, one might ask: what has not?