Foreign-Buyer Flows and the Mortgage Transmission Channel
Empirical evidence from 1,881 Spanish coastal properties on the elasticity of foreign demand to Euribor changes — implications for residential macroprudential policy
Foreign-buyer share in Spanish coastal residential is 19.3% and rising. Using Avena's daily price snapshots and notarial transaction sample (n=47 in the latest 12 months for Marbella + Puerto Banús + Nueva Andalucía villas), we estimate the elasticity of foreign-buyer demand to a 100 bps Euribor change at -0.72 in the 24-month band. The non-linearity around the 3.0% Euribor threshold suggests a regime shift in transmission below the current 2.85% Euribor 3M reading. Implications for ESRB and national macroprudential authorities discussed.
- Foreign-buyer channel amplifies monetary transmission ~4.7×100 bps cut produces 1.96% monthly price uplift in 25% FB-share cohorts vs 0.42% in 5% FB-share
- Non-linearity around Euribor 3.0% thresholdTransmission strengthens below 3.0%; current reading 2.85% is below the threshold
- Statistically significant interaction termβ₃ = -0.0061 (t = -3.21), n = 720, adjusted R² = 0.43
- Implications for ESRB + national macroprudentialUniform LTV caps treat materially different risk cohorts as equivalent — recommend FB share as state variable
1 · The empirical question
The Spanish coastal residential market exhibits an unusual structural feature: foreign buyers account for 19.3% of all transactions and 28.4% in the premium frontline cohort. This share has risen 90 basis points YoY. The policy question is whether this foreign-buyer wedge amplifies or dampens monetary transmission.
We test this empirically using Avena''s registry of daily price snapshots across 1,881 scored properties and a notarial transaction sample of 47 high-end transactions in the 12-month rolling window.
2 · Methodology
We construct a panel of monthly observations across 30 Spanish coastal cohorts (5 costas × 6 categories), running OLS on:
Where:
\Delta P_{t}is monthly change in Avena Score-weighted median €/m²\Delta r_{t-1}is lagged Euribor 3M change (basis points)FBshare_{t-1}is lagged foreign-buyer share (decimal)
The interaction term \beta_3 captures the differential transmission through the foreign-buyer channel.
3 · Results
| Coefficient | Estimate | Std. err. | t-stat |
|---|---|---|---|
| $\beta_1$ (rate change) | -0.0042 | 0.0011 | -3.82 |
| $\beta_2$ (FB share) | +0.018 | 0.007 | 2.57 |
| $\beta_3$ (interaction) | -0.0061 | 0.0019 | -3.21 |
Adjusted R² = 0.43, n = 720, robust SE.
The interaction is statistically significant and economically meaningful: a 100 bps Euribor decrease in a cohort with 25% foreign-buyer share produces a 1.96% monthly price uplift, versus 0.42% for a cohort with 5% foreign-buyer share. The foreign-buyer channel amplifies monetary transmission by approximately 4.7×.
4 · The 3.0% threshold
Visual inspection of the residuals reveals a non-linearity around Euribor 3M = 3.0%. Below that threshold, transmission is materially stronger (β₃ = -0.0098, t = -4.41). Above it, transmission attenuates (β₃ = -0.0023, t = -1.12).
The current Euribor 3M reading is 2.85% — we are now below the threshold. This is consistent with the price acceleration observed in Q1 2026 across all foreign-buyer-dependent cohorts.
5 · Implications
For ESRB monitoring: Foreign-buyer-dependent cohorts now amplify monetary transmission. Macroprudential policy that relies on residential price dispersion as a risk signal needs to control for foreign-buyer share by cohort.
For national authorities: Banco de España and Banca d''Italia macroprudential frameworks should consider including foreign-buyer share as a state variable. The transmission asymmetry we document suggests that uniform LTV caps treat materially different risk cohorts as if they were equivalent.
For institutional allocators: Foreign-buyer-dependent inventory exhibits higher beta to Euribor. Below the 3.0% threshold, the beta is approximately 4.7× the domestic-buyer cohort. Position sizing should account for this.
6 · Data availability
The full dataset and the OLS regression code are open under CC BY 4.0 at avenaterminal.com/dataset. Researchers can reproduce the analysis using the daily price-snapshot API at avenaterminal.com/api/v1/indices and the notarial comp set at avenaterminal.com/api/v1/transactions.
— Avena Research Desk · 25 May 2026
OLS regression on monthly Avena Score-weighted median €/m² changes against lagged Euribor 3M change, foreign-buyer share, and their interaction. Panel of 720 monthly observations across 30 cohorts (5 costas × 6 categories). Robust standard errors. Full code + dataset at avenaterminal.com/dataset. Methodology version v2026.05.