OP — sorry for my long post. I agree with everyone else here. You don’t owe his children anything. They’re his responsibility. Yes, you married him, but they’re not your children. Legally, religiously, spiritually, morally — cut the pie whichever way you like, they’re not your children, not responsibility and you don’t owe them anything. (If you and DH were to divorce tomorrow, you’d be permitted to legally/morally/religiously marry his children. If they were actually your DCs, you wouldn’t. Im not suggesting you or anyone would; I’m just making a point here.) So to get things straight, they’re not your children.
There are two ways of interpreting what your DH has said/done: (1) The Good-will Interpretation and (2) The Cynical Interpretation.
On the Good-will Interpretation, he just loves his children, he thinks now that you’re married you should see them as your own, and that marriage with him trumps your own blood-relations, so you should write everything to them. He wants to go live somewhere nice with you; but he’d rather you sold yours because his house is worth more, and it means his children will get more when they inherit it. Yours isn’t so nice, so you should sell it, give 50% to him by buying joint property in Spain, and then eventually hand over the remaining 50% to his children. Even on the good-will interpretation, I’m struggling to see how he’s not plain selfish.
Now for the Cynical Interpretation. (And I must apologise in advance because you married him, so you obviously love him, and this will hurt.) He’s a manipulative, grabbing man who is happy to marry a woman only if she has her own property; and the fact that she has no kids makes it even more convenient because he can coerce her more easily emotionally into leaving everything to him and his children. To achieve this, he needs to make her give up all (or at least half) of what she owns to him and his children. One way of doing this would be to convince her that she ought to sell her property and buy another with him, where it’s joint ownership. This means that (in case he doesn’t succeed in convincing her to leave her property to his children) his children are guaranteed to get at least 50% of her assets — a portion they wouldn’t be entitled to without the joint ownership, which effectively means you’re handing over 50% of everything you own to him.
But she resists. So he then needs to manipulate her into thinking that her family are not worth her love and affection (nor her assets, which is what he’s really driving at). As for her attachment to her house, he needs to undermine that too (the neighbourhood’s not a nice one anyway, her tells her, and it’s no loss to giving it up).
I don’t know what his motives are. And I don’t think anyone other your DH knows what really goes on in his head. But if I were you, I’d prepare (legally) for all eventualities. I’d seek legal advice discreetly, and I’d write a will to whoever I want, but without his knowledge. In the meantime, if he ever brings up the holiday home, just buy time and say “mañana, mañana” until you figure out how you feel about him and where your relationship is heading. But if the Cynical Interpretation is correct, my guess is he’ll hang on in the hope that he’ll eventually get at least some of what he wants.
Finally, as some have suggested here, what happens if you go with his plans and you get divorced? You’d effectively have little to fall back on financially. You’re in a good place now, so don’t rush it. Also, you didn’t consider what would happen if you ever needed to go to a care home in older age or if you get ill. Do you have enough savings to cover that? Someone I know had to sell their home to fund their own care. If you buy a joint-ownership house in Spain, or you wrote your house in your nieces’ names now, it won’t be so easy to sell and access the cash you need for medical treatment or for care.
Oh and never move to Spain with him. You’ll be entirely isolated there in case he does turn out to be a manipulative, narcissistic turd. And their legal system is different to ours, so if he is a bad egg, it’ll be harder for you to fight back. Stay in the comfort of your own home, nearby loved family, and in a legal system you understand. That way, if shot hits the fan, you have all the help and support you need.
Seek legal advice & write a will to whom you please, but do so discreetly. Rethink your relationship with this man, and never sell your home for him or anyone else. It’s your safety — it’s all you have to fall back on, and it’s what you’ve spent your whole life working hard to own.