This does next to nothing to protect locals. Outsider purchases makes up less than 5% of housing sales. The bigger issue are Airbnbs/short-term rentals, the majority of which are owned by locals. This is Spain's attempt at deflecting/placing the blame on foreigners and immigrants when it's an internal issue (Spain isn't alone in doing this. Many countries do. Easier to blame someone else than oneself...especially for politicians).

The only thing a law like this does is harm the smaller towns and villages looking to attract outsiders because their communities are aging out.