One of the only certainties about the Spanish property market after Brexit is that nothing is certain. Withdrawal deals have yet to be agreed upon and an election hanging on the possibility of another referendum still looms. In this article we give our analysis of the possible consequences Brexit has on the Spanish property market.
There is still everything to play for
The uncertainty over Brexit is leading people in Britain to be more cautious about their spending. It is a difficult time for anybody hoping to invest in anything. This is especially true for property in a country that people may soon not have easy access to. Perhaps surprisingly, however, a recent spate in property sales by British people suggest that Brexit may be driving sales.
British people remained the highest group of foreign buyers in Spain and in 2018 made up 14% of the international market. However, there is speculation that Brexit may drive a shift to the market being dominated by the French, Danish and Germans. A slowdown in the British economy as a result of Brexit could lead to a lack of consumer confidence. The current drive in British home ownership in Spain could be a brief calm before the storm of Brexit. Sales in Spain correspond to the strength of GBP, with high sales when the value of GBP is high. As such, the growth that the country has enjoyed since 2013 may slow down.
Those already with property are doing okay
British people who already own property in Spain are in a privileged position. While the pound has been unsteady in the wake of the Brexit referendum, the Euro has continued to climb. This means that purchasing property in Spain could be a good investment. However, anyone thinking of investing in property in Spain should be aware of the general decline in the market. The Spanish property market’s lowest sales in five years may affect future returns on any new house sale. This figure is only related to the amount of properties sold, however. Prices are on the up; in 2018 there was a rise in house prices by 6.49%.
Any sales that are made may only be by those looking to get a place in the sun, and away from the political turmoil of Brexit. It remains uncertain whether people will be looking towards Spain for investment opportunities, to other European countries or further afield. Furthermore, top-end property sales seem to be largely unaffected as those with money will continue to spend it. Any purchasing uncertainty so far seems to be those at the lower end of the wealth scale. Nevertheless, people who feel pessimistic about Britain’s chances outside of the EU may do well investing in property in Spain. One reason why might be that mortgage rates are currently much lower than normal.
It is not all doom and gloom
As Brexit makes life uncertain back home, so too does it leave the economies of other EU countries precarious. As a country fully integrated into the EU, both politically and culturally, the UK could stand to lose a lot. However, if politicians, economists and market analysts are to be believed, then after a difficult period the country will recover. This means that British purchasing power will eventually be restored and people’s fervour for buying in Spain after Brexit will return.
For more information, we also recommend you this article about Spanish residency after Brexit.