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Foreigners and their funny financial habits
Samantha Kett, thinkSPAINtoday , Friday, July 6, 2007

Expats are welcomed by property sellers and used car-dealers, says recent research. We also keep the population young and are less likely to get into debt…

For richer, for poorer
While the native population of Spain is fond of buying their biggest assets on credit, it seems that foreigners living here avoid loans and finance like the plague. Whether they are buying houses, furniture or cars, expatriates – European citizens or otherwise – or more inclined to pay the full price up front in cash.

The Observador Cetelem 2007 report, sponsored by BNP-Paribas, says around half of Spanish nationals buy furniture on credit, whereas just a quarter of foreign residents do so. The bank’s Foreign Affairs and Research manager, Salvador Maldonado, says this is largely due to the fact that expatriates have difficulty in obtaining finance for large purchases because of their low incomes or precarious economic situations.

Yet, often, these results are due to the reverse situation – that the customer in question has enough funds to buy what he or she requires without needing to borrow any money to do so. In other cases, it is simply fear of getting into debt, especially in a foreign country where they are not necessarily familiar with laws and procedures covering credit, that puts them off paying for goods in instalments.

The study involved interviewing 2,000 people resident in Spain – ‘junior’ citizens (classed as 18 to 35-year-olds) and those the organizers referred to as ‘senior’ citizens (who were not necessarily anything of the kind, but in fact were aged 55 and over) and foreign residents of all ages.

It also looked into expatriates’ car-buying habits and found that they are more likely to pay in cash than Spanish citizens, and tend to opt for second-hand rather than brand-new cars. In fact, Maldonado believes expats’ presence in Spain is great news for the used car industry. They have given sales of second-hand cars, and all-terrain vehicles, a huge push. This means that, although sales of newly-registered vehicles are expected to fall by 1.6 per cent this year, the industry as a whole should see good results as the former will offset this loss.

Like their native neighbours, expatriates prefer to buy rather than rent their home, El Observador Cetelem reveals, although they tend to buy in cash more often than on a mortgage and opt for second-hand properties rather than new builds, on the whole. Although the reason given for this trend is that foreign residents have more difficulty in obtaining credit, house-price inflation in Northern Europe in the last decade has meant that a number of expatriates from these countries have been able to buy their properties outright.

Expatriates – good news for Spain
According to the report, Spain as a country will always benefit from immigration. Foreign residents from poorer countries mop up the numerous vacancies for less-popular, less well-remunerated jobs, given that their salaries will be much higher than in their home country and they are even able to send money back to family members they have left behind.

Additionally, more babies are being born to foreign mums than to Spanish women – the birth-rate in Spain is at an all-time low of 0.8 children per couple, due to the problem of temporary employment contracts and out-of-reach house-prices forcing women of child-bearing age to put off starting a family. However, foreign mums are redressing this balance, meaning that fears of an increasingly ageing population may be unfounded.

‘Senior’ citizens – the new youngsters
El Observador also revealed that the older generation today has a strikingly different outlook on life than their forefathers and mothers. They tend to have a higher level of education, be more cultured and well-travelled and better off financially than their predecessors. The 21st-century retiree is also more likely to be concerned about their general physical health and well-being, with 95 per cent of women making an effort to eat a healthy, balanced diet.

These changing habits do not bear any particular relation to nationality, although Spanish people are more likely to stay in their home town after they retire, with 91.8 per cent expressing their intention to stay put once they reach 65. A huge contrast to the Northern Europeans, the majority of whom seek out warmer climes or, at least, a change of scenery, when they are no longer restricted by the daily grind. 

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