If you have a property for sale in Spain, you would probably be looking at the situation in the Spanish real estate market with a lot of interest. In particular, you would be worried about the British interest in Spanish property, whether that has suffered following Brexit.
Brits have always been the biggest investors in Spain. The British appetite for Spanish villas has always been high, but there is plenty of evidence to show that the demand has ebbed right now, as an immediate consequence of Brexit.
But that was only to be expected, given the knock taken by the British pound following Brexit. Prior to the June 23 referendum the currency exchange rates were very much in favour of British buyers – 1 British Pound was worth 1.51 Euros in 2015.
Back then, the tide was in favour of Britain and there was a lot of confidence in the air. Brits were not afraid to invest not just in Spain, but also in other popular overseas property destinations, such as France, Portugal, Greece and Italy.
The situation changed after the Brexit referendum. The pound had a great fall immediately after the June 23 vote. It has continued to fall. At current exchange rates, the British pound is worth 1.12 Euros. This is certainly not good news as it reduces the buying power of British investors.
Of course, if you’re looking to sell your villa in Spain fast and transfer the proceeds to the UK, you are actually at an advantage, as the strong Euro and weak Pound means you will have more money in your bank account.
However, for Britons who wish to buy a holiday home in Spain, they find themselves at a deep disadvantage. Their dream home in Spain has suddenly got so much more expensive for them.
Even so, despite the problems created by Brexit, it’s not all bad news for those who are looking to invest in Spain. Finally, after a wait of 10 months, Spain has a government. Mariano Rajoy has been elected as the Prime Minister of Spain, with the opposition abstaining from the vote.
The political instability in Spain was a huge problem. The country has had two elections in the space of 6 months, and there was a real worry that there was going to be a third election. Fortunately, there is a government in Spain, finally, and this should assuage some of the concerns that many investors have about investing in the country.
The drop in British demand for Spanish real estate remains a major concern, and cannot be done away with. It’s easy to understand why – in 2015, 20 percent of the homes in Spain that were sold to a foreign national went to somebody from Britain. So, when the British interest takes a hit, this affects everyone in Spain.
The impact of the Brexit vote is more on the higher end of the real estate market in Spain. There’s no question that there’s been a definite decline in British interest in luxury properties in Spain. This can change soon, depending on the situation in the UK.
Any improvement in the British economy will certainly impact the real estate market in Spain in a positive way, as it would make UK nationals more confident about investing in the overseas property market.