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Article 50: Far from the end for the Spanish Property Market

Thursday 27th April 2017

Written by Roy Weatherby, The Overseas Investor

The rain in Spain may fall mainly on the plain, but the fallout from Brexit and Article 50 has been felt throughout the Spanish property market and has been felt most keenly in the places which have traditionally been popular with British property buyers.  
While it’s probably fair to say that now is an uncertain time for the Spanish property market, there’s an overall mood of cautious optimism.
The British still love Spain
One of the key facts to grasp about Brexit is that it was a rejection of the EU (or a statement that the UK would be better off outside of the EU) rather than a rejection of Europe itself.  
Although the UK’s membership of the EU did bring certain practical advantages to those who did or wished to retire to Spain, in general, these can be worked around, for example if free medical care is withdrawn, it may be replaced with medical insurance.  
The fundamental attractions of Spain, namely great weather, great food, great culture and great travel connections with the UK, all still hold as true as they ever did.
Affordability may be tightened, but is still realistic for many people
There are basically two factors involved in the financial planning of a move abroad. One is the up-front cost of buying a place to live and the other is the ongoing cost of actually living in it.  For those who main (or only) source of income is from the UK, i.e. in pounds, the exchange rate between Sterling and the Euro will play a role in determining whether or not a move is financially viable.  
While Brexit has seen the pound lose its value across all major currency markets, it’s worth noting that the drop against the Euro was only in the region of about 10% and could arguably be viewed as a positive in the sense that it provided a reminder to people that it is important to be aware of the potential for currency fluctuations when making financial plans for an overseas move.
British buyers move towards the affordable end of the market
At present time, over 90% of the quarter of a million UK nationals living in Spain have their homes on the southern coastline and in the Balearics and Canary Islands. Out of all these areas, the islands and the Costa del Sol have established themselves as the premium end of the market, followed by the Costa Blanca.  
Over the last couple of years, there has been a steady downturn in Spanish property purchases by UK buyers.  In Q4 2015, around a quarter of sales to non-Spaniards were to people from the UK, by Q4 2016 this had dropped to less than a fifth. Notwithstanding this, however, sales in the Costa Blanca are on an upward trend and UK buyers still form a key part of the market in this area. Statistics from property portals also show a lot of activity from the UK, although this has yet to turn into an upturn in sales.
The outlook for 2017 and beyond
Putting all this together, it seems very likely that UK buyers are waiting for more clarity on what form Brexit will take and where they will stand once it comes into effect. It is possible that for the immediate future, UK retirees will look at rental property partly to hedge their bets and partly as a chance to explore locations which are currently less popular and therefore more affordable.  
One entirely feasible scenario is that the British will start to gravitate towards the lower-priced markets in Alicante (or parts thereof), Almeria and Murcia, while international buyers from other places (such as Germany and Scandinavia) will take over the premium end of the market.
For more information or to browse a range of properties for sale in Spain, please contact Hopwood House.

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Editorial Contact Details - Conor Shilling
0845 672 6000
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