UK investors and second home owners have long been one of the key groups of international buyers of Spanish property. The British appetite for homes in Spain right now, however, seems to have taken a knock as a result of the British public’s decision to pursue Brexit.
One of the key reasons that demand for Spanish property among British buyers has taken a knock is the referendum’s impact on exchange rates. Prior to the referendum, exchange rates were in favour of Britons purchasing within the Eurozone. Indeed, this was one of the factors driving the return of British investors to Spain after a dip in interest following the lasting effects of the financial crisis on the market. As a result of the referendum, this situation has not only evaporated but reversed. The pound has tumbled to a long-time low against other major currencies including the euro. From the point of view of a UK national looking at a Spanish properties, this major shift in exchange rates means that the cost has suddenly become significantly more expensive. Naturally, this has detracted from the willingness of such potential buyers to actually move forward with a purchase at this time.
There is also a lot of uncertainty in the Spanish market at the moment, as a series of general elections has failed to elect a new government. This throws doubt on the political situation in Spain and the direction things may take when a new government is finally elected, with property taxes being one of the key concerns buyers and investors wish they could have more clarity on. Spanish agents are reporting a drop in domestic property sales which is being attributed to this political uncertainty, and it could well be further impacting the sentiments of British buyers as well.
The drop in British demand is no small matter for the Spanish market, as the UK is the largest single source of international demand for property. Last year, a fifth of all the country’s homes that were sold to foreigners went to somebody from the UK. While there are not yet firm figures to show what kind of impact the Brexit vote has had on this situation, agents are reporting a significant slowdown in activity.
So far, the impact of this is most prominent at the higher-end of the market. Higher-value, more luxurious properties have seen a very definite drop in interest from UK buyers, while other sections of the market have not been so profoundly affected. If the trend continues, however, it may well be that this effect becomes more evident across the board.
However, it is worth bearing in mind that it has only been a few short months since the polls closed on the UK’s referendum, with the result coming as a surprise to many. What has been seen so far is only the immediate and short-term effect, and many agents feel that, so long as the pound does not drop further, the key market of retiring UK expats is very unlikely to be this easily deterred from buying in Spain on a large scale.
Author Bio
Hopwood House are property investment specialists, with a wide range of holiday homes and investment properties for sale in Spain in areas such as Malaga, Alicante and Murcia.
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Daniel Peacock