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Effects of Brexit on Spanish Property Market

By
Services for Real Estate Pros with Cancasa

 

The 23rd of June, 2016 is certain to be remembered as one of the most monumental dates in the history of Europe. One word, Brexit.
The surprise outcome (or not so surprising), has caused significant worry and numerous questions about how it will all end and what impact it will hae on the property market in Spain.

There is no doubt that France and Spain represent the best loved second home for Brits.
Generally, British people have been the most sizeable group of Spanish property buyers in the recent past. Their purchase volumes are twice those of the French, who are in second place.

The Spanish Association of Registrars (the Colegio de Registradores) has indicated that in the fourth quarter of 2015, British buyers were responsible for almost 25 percent of all foreigner purchases in Spain. However, in the interim period, a significant decline has been observed in terms of the British. At the same time, buyers from Belgium and France have increased their share of property purchases in Spain.

 

Spain Property Sales by Nationality

The stats above can be replicated in many parts of Spain and as an example, a client I used to work with noticed the same trend with property sales.

Property purchases on the island in terms of market share clearly shows a drop in British buyers which is slowly being filled in by other EU nations such as France & Belgium.

There are several facets of these events that are worth noting. First, Brexit itself and the resulting weakness of the pound will harm British purchasing power when it comes to properties in Spain.

However, as described by the then chancellor George Osborne, home prices within the UK itself were estimated to drop between 10 and 18 percent if Britain were to retain its spot as part of the EU. If true, this would have been a boon to the property market in Spain as British buyers would look elsewhere to make their property investments, with France and Spain being likely targets. Another silver lining to a weak pound is that it would encourage Brits hoping to dispose of Spanish property to reap the benefits of a weaker currency because they would receive a greater number of pounds from a sale.

As several Tenerife estate agents says, all of this begs the question of whether there will be a massive decline in demand for Spanish properties among Brits.
The answer lies in the actual degree of uncertainty felt and the overall effect on the pound. Should the pound depreciate more than it already has in relation to the Euro, British property buyers will likely have lower demand for property in Spain.

Of course, that is not to say that the romance which Britons and Spain itself have carried on for decades will be harmed in any way but the real estate market will be going through changes to accommodate this shift.

How is Brexit affecting the current market?

 

 

Posted by

Peter Spain

After following the property sector for several years especially in Spain, I came to understand the cycles and all the attendant peaks and troughs that come with it.
I now focus my efforts on helping established local agents with their online presence and visibility. Several Spanish agencies are benefitting from the attention to detail and meticulous research that I provide which forms part of the marketing strategy I offer.

 

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