Best places to buy a holiday home in Spain in 2023

Buying a holiday home in Spain is growing in popularity, and it's easy to see why: living for three months a year in a sunny, relaxed place sounds ideal. Plus, renting out the property can make it a smart investment.

If you're contemplating this but are still weighing your location options, read on. 

We've compiled information about the best places in Spain to invest in a holiday home.

What’s the property market like in Spain?

Spain is a prime destination for holiday home buyers, particularly those from the UK, Germany, and Scandinavia. 

In October 2023, there were big differences in house prices across different parts of Spain. In Alicante, the average price was 2,377 EUR for every m². In Barcelona, it was around 2,467 EUR. Málaga had the highest prices at 2,996 EUR. 

However, the most pronounced price variations were witnessed in the Balearic Islands. Formentera showcased soaring prices at 8,439 EUR per m², contrasting with Petra, where prices averaged 1,556 EUR per m².

These differences are more pronounced in high-demand locations such as coastal areas, islands, and culturally rich cities, where premium prices are the norm.

Is it worth buying a holiday home in Spain?

Investing in a Spanish holiday home offers a convenient vacation spot, rental income, and an increase in property value in a location known for its culture and pleasant weather. 

It also comes with ongoing costs, market and legal challenges, and the effort of managing properties. 

However, renting out an apartment in popular tourist cities can offer stable income due to ongoing demand from expats and locals. If you’re interested in exploring more, continue reading everything you need when buying a property in Spain to let. 

5 of the best places to buy a holiday home in Spain

So, which is the best place to buy a holiday home in Spain? 

Here’s a list of 5 of the most popular options, including helpful info on prices, pros and cons, and anything else you need to know.

#1. Buying a holiday home in Barcelona 

Barcelona is a city where you can enjoy nature, eat tasty food, and experience different cultures. It's a tourist hotspot and offers an excellent environment for living and working. 

However, it's also one of the most expensive places in Spain to buy property.

Property prices in Barcelona

In October 2023, the most expensive houses for sale in Barcelona were in the Sarrià-Sant Gervasi area, costing an average of 5,314 EUR/m². 

The cheapest ones were in the Nou Barris area, with prices averaging 2,465 EUR/m².

Pros and cons of buying a holiday home in Barcelona

Pros

• the cost of living in Barcelona is lower compared to Germany, the UK, the US
• various mortgage alternatives are available for foreigners purchasing real estate in Barcelona
• a large community of expats, presenting a great opportunity to rent out the apartment throughout the year

Cons

• property prices in Barcelona are among the highest in Spain
• Barcelona doesn't give out tourist licenses anymore, so you can't rent your property to tourists for short stays, unless you buy a property that already has a license

✈️ Numerous UK and German airports offer several flights to Barcelona daily, making travel between these locations highly accessible and convenient. Similarly, big US cities like New York and Los Angeles have many flights to Barcelona.

Tip

Taxes in Spain vary based on property type. A 10% Value Added Tax (IVA) and a Stamp Duty between 0.5% - 2% apply for new properties bought directly from developers. A Transfer Tax (ITP) ranging from 6% to 10% is charged for second-hand properties, varying by region.

If you're considering buying a property in Barcelona for living or rental, continue reading a guide to find essential info to help kickstart your home-buying journey.

#2. Buying a holiday home in Madrid

Madrid is a popular place to buy a holiday home, being lively, full of culture, centrally located in Spain, and offering a variety of property options. It's also a convenient base for exploring the country.

Property prices in Madrid

In October 2023, properties in the Chamberí area had the highest asking prices, averaging 6,083 EUR/m2 while the Villaverde area had the lowest, with prices averaging 1,924 EUR/m2.

Pros and cons of buying a holiday home in Madrid

Pros

• foreigners can buy property in Madrid by following specific legal processes consistent with other Spanish cities
• non-EU citizens who invest at least 500,000 EUR in a property, may qualify for residency under certain conditions
• the price per m2 for an apartment in Madrid can be up to 73% cheaper than in London, depending on its location inside or outside the city center

Cons

• multiple taxes related to property ownership
• renting out your property subjects you to a non-resident income tax, which ranges from 19% to 24%

✈️ There are many flights from the UK, particularly from London to Madrid, available through various airline options—the same in Germany. 

Tip

You’ll require an NIE—an identification for foreign buyers that serves as your tax number. Securing an NIE is mandatory for purchasing property or accessing a mortgage in Spain, as it enables local authorities to process your annual tax; without it, such transactions and processes cannot be completed.

Buying a holiday home in Madrid can be an excellent choice if it suits your budget and way of living, but it’s important to think about the high costs and talk to someone who knows the local market well. 

#3. Buying a holiday home in Tenerife

Tenerife is the largest Canary Island and has many different places to visit, from beautiful natural spots to popular beach resorts. Costa Adeje and Playa de las Américas in the south are especially popular.

Plus, there are lower property prices compared to Madrid or Barcelona. 

Property prices in Tenerife

In October 2023, properties in the Centro-Ifara area of Santa Cruz de Tenerife had the highest listed prices, at 2,457 EUR/m2. 

In contrast, the Ofra-Costa Sur area recorded the lowest average prices, at 1,199 EUR/m2.

Pros and cons of buying a holiday home in Tenerife

Pros

• property prices are more affordable than in Madrid or Barcelona
• a great opportunity to rent out property in Tenerife, as it is a popular vacation destination
• tax benefits available to property owners, especially for rental income

Cons

• rental income can be inconsistent due to seasonal variations in tourist arrivals
• insurance for properties in Tenerife, especially those near the coast, might be higher due to risks like flooding or storm damage

✈️ Tenerife is a favored vacation spot for people from the UK, with many airlines providing a range of direct and connecting flights, including standard and budget-friendly options.

Tip

In Tenerife, buyers of second-hand properties are subject to a Property Transfer Tax (Impuesto de Transmisión Patrimonial), a set rate of 6.5%. This progressive tax typically ranges between 6.5% to 10% in other regions, depending on the property's value. 

If you’re ready to buy a holiday home in Tenerife, continue reading a guide that covers the process, requirements, and tips to make an informed decision.

#4. Buying a holiday home in Mallorca

Mallorca draws numerous international buyers with its attractive property market, housing options, and quality of life, enhanced by a vibrant expat community. 

Its easy accessibility from major European cities makes it a preferred location for holiday homes and permanent residences.

Property prices in Mallorca

In October 2023, the average asking price for residential properties for sale was 4,125 EUR/m2, reflecting an increase of 22.88% compared to October 2022, when it was 3,357 EUR/m2.

Pros and cons of buying a holiday home in Mallorca

Pros

• properties in Mallorca tend to appreciate over time, making it a good investment
• the cost of living in Mallorca is generally lower compared to the UK across various spending categories
• high rental income potential

Cons

• the popularity of Mallorca has driven up property prices and transaction costs, making the initial investment quite high

✈️ Mallorca is well-connected to major European cities through regular flights, making it convenient for property owners to travel to and from the island.

Foreigners are welcome to buy property in Mallorca as Spain has an open real estate market that embraces international buyers. Continue reading to discover tips and steps for buying property in Mallorca as a non-resident.

#5. Buying a holiday home in Alicante

Situated on Costa Blanca, Alicante is known for its beautiful beaches and rich history. It is also a popular spot for British citizens wanting to buy holiday homes in Spain.

Property prices in Alicante

In October 2023, properties in the province of Alicante had the highest asking price in Benissa, at 3,611 EUR/m2, while Tollos had the lowest, with an average of 294 EUR/m2.

Pros and cons of buying a holiday home in Alicante

Pros

• large number of UK expats (plenty of social activities for English speakers)
• well-connected through its international airport and high-speed train services
• stunning sandy beaches

Cons

• more expensive than other coastal regions in Spain
• the rental market can be competitive, especially during the high season, with an abundance of holiday homes and rental properties available

Homevest helps you buy your holiday home in Spain from abroad

If you're looking to buy a holiday home from abroad, Homevest can be a helpful solution, particularly if you're planning to acquire a property in Spain through a mortgage.

Homevest puts you in touch with leading banks in Spain that provide financing to non-residents. By consolidating documents in one place, you save time and can more easily request and compare bank offers from CaixaBank, Sabadell, Santander, Unicaja, or Cajasur.  

It’s essential to note that in Spain, negotiating the mortgage interest rate is common, so having a comprehensive view of the current rates is essential to secure the best deal for you.

Stefan and Vivien, a German couple, decided to purchase a holiday home in Empuriabrava on the Costa Brava. After signing the initial purchase agreement, they encountered challenges dealing with two banks independently. Banks caused delays, and negotiations didn't progress well. That's when Homevest stepped in, securing the loan in just 6 weeks.

Homevest's role was to assist Stefan and Vivien in obtaining the best loan for their property investment. Stefan prioritized a rapid process, and we identified the most suitable bank to secure the most competitive deal in a short timeframe.

The customers saved nearly 3,000 EUR by negotiating a reduced commitment fee, not to mention the competitive interest rate margin of 0.95%, which will lead to long-term savings for the client. Continue reading the full case study on obtaining a mortgage in Spain from Germany.

What are the best Spanish mortgages for buying a holiday home as a non-resident?

Sabadell, CaixaBank, Santander, Unicaja, Cajasur, BBVA, Bankinter, and UCI offer loans to non-residents interested in buying a holiday home in Spain.

Below, you will find the key characteristics of the 8 banks discussed in this article:

Keep reading to learn more about getting a mortgage in Spain, including requirements, interest rates, and info for non-resident buyers.

Advice on buying a holiday home in Spain 

1. Search carefully to find a property that meets all your needs. If you're buying from Germany, ImmoScout24 can help you find what you're looking for. If you're in Sweden, try using Hemnet.
2. Use a mortgage comparison tool to look at all the suitable financial options for you. Homevest can help you compare mortgage loans in Spain and speed up the application process directly from abroad. 
3. It's wise to apply for the NIE number at the Spanish Consulate in your country early to get the Spanish financial number on time.
4. Choose a lawyer who has knowledge of Spanish laws to navigate you smoothly through this process. By collaborating with Hoteland legal services, Homevest can assist in property due diligence, conduct contract negotiations, and offer representation in Spain.
5. Secure a tourist license from your local municipality before renting out your property to avoid fines and ensure you comply with local laws and regulations.

Sources used in November 2023:

1. Property prices in Spain
2. Property prices in Barcelona
3. Property prices in Madrid
4. Property prices in Tenerife
5. Tourist license to rent out a Spanish property
6. Property prices in Palma de Mallorca
7. Property prices in Alicante

We recommend obtaining professional or specialist advice before taking or refraining from any action based on the content in this article. The information in this article does not constitute legal, tax, or other professional advice from Homevest Limited. Prior results do not guarantee a similar outcome. We make no representations, warranties, or guarantees, whether express or implied, that the content in this article is accurate, complete, or up to date.