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How has the Spanish Property Market changed after Brexit?



On 23rd June 2016, Britain voted to leave the European Union after a historic referendum. Since then, Brexit has brought uncertainty, discussions and disagreements on many different matters, causing significant volatility within the British pound (GBP).

Consequently, post-Brexit, there has been much unpredictability within the UK property market and the value of house prices, also impacting the property market in foreign countries. On the whole, the Spanish property market after Brexit has seen a continued increase in house prices and healthy demand amongst foreign buyers. Whilst demand amongst UK buyers diminished during the start of the coronavirus pandemic in 2020, interest has slowly been on the increase since the summer.

There is much to be considered when observing the Spanish property market after Brexit, with there being an active timeline of events since the 2016 referendum. Here is a guide to how Brexit has impacted the Spanish property market and the core effects that Brexit had on house prices and foreign buyers.

Missing piece from a European jigsaw puzzle revealing British flag and Brexit question symbolising Spanish property markets after Brexit

How has Brexit impacted the Spanish property market?

Brexit had a significant impact on the Spanish property market as well as global property markets, seeing house prices and demand evolve considerably. Since 2016, house prices in Spain continued to grow as buying interest from other countries began to increase. Following a difficult 2020, estate agents have forecast that Spanish property prices will see a rise during early 2021. November 2020 already saw significant property price increases year-on-year in multiple regions including:

  • Catalonia (2.8%)
  • Aragón (2.1%)
  • Extremadura (1.8%)
  • La Rioja (1.1%)

The number of German, Russian, Irish and Chinese buyers also saw substantial growth after the Brexit referendum and saw the Spanish economy perform better in the later years, supplying further demand from local investors. Here are the main points of Brexit’s impact on the Spanish property market.

Spanish property sales after Brexit

Whilst the Spanish property market saw strong sales post 2016, March 2020 saw a dramatic decrease in Spanish property sales year-on-year, falling by around 37%. Whilst this was largely down to the effects of the coronavirus pandemic, it is expected that there will be a strong resurgence of Spanish property sales in 2021. The predictions coincide with the Spanish Government’s forecast of a 7.2% growth in Spain’s gross domestic product (GDP) in 2021, following a 11.2% drop in 2020.

Sales of Spanish properties in Spain month-on-month 2007-2020

sales of spanish property data

Foreign Spanish property purchases after Brexit

Foreign buyers make up 16% of the Spanish property market, with UK buyers traditionally making up the largest proportion of overseas property buyers in Spain. In 2015, Brits bought 15,810 properties in Spain and were the largest group of non-Spanish nationals to invest in Spanish property. Next were French property buyers, who made up 8.8% of foreign property sales in Spain; German buyers, who accounted for 7.5%; Belgian property buyers at 5.7%, and then Spanish homebuyers from Italy at 5.3%. Romanian buyers were also joining the Italians in sixth place, making up 5.3% and representing 59% growth since 2014.

Three years later in 2018, Madrid proved to be an incredibly popular location for foreign property buyers, with over 5,000 property sales made by overseas investors within the first half of the year.

However, data from Spain’s notaries, shows that the first half of 2020 saw a 41% decline in property sales from British nationals compared to the previous year. The fall in figures means that UK buyers were only responsible for 1.5% of Spanish property purchases during Q3 of 2020. There was already indication, however, that UK property purchases in Spain were on the decline in 2019, falling by 12.7% compared to 2018.

Whilst Spain is likely to continue to remain an attractive place to live for British nationals in 2021, new Brexit rules could also deter potential buyers. The most notable change affecting UK owners of Spanish property is the new regulation preventing UK citizens exceeding a 90-day stay within the Schengen area in a 180-day period. UK Citizens wishing to exceed their length of stay will need to apply for a special visa.

Number of foreigners buying property in Spain by nationality

Where was the most significant growth in the  Spanish property market after Brexit?

The Spanish property market saw a general increase after Brexit, with significant growth seen in the Balearic and Canary Islands. “Significant growth in the sales of Spanish properties in the Balearic and Canary Islands could represent a move toward buyers in ever-popular holiday destinations in the wake of the Brexit decision, as buyers view them as a safer investment,” comments David Johnson, Director at currency and overseas property specialists, Halo Financial.

“However, declining property sales in regions such as Murcia, a long-time favourite of UK buyers, with its popular golfing resorts, could reflect a trend for British homeowners in Spain selling their properties in the wake of the Brexit decision and a sense of caution while the uncertainty around Brexit continues.”

Brexit Affects Spanish Property Market and Currencies

“There is also the matter of currency, of course,” adds Johnson. “The Pound has weakened since the referendum and continues to struggle in the face of uncertainty and ongoing negative sentiment about Brexit. Those who are selling Spanish property to UK buyers will get more for their money, so people who may have been on the fence about selling have made the most of the best EUR-GBP exchange rate for six years and taken action. At the same time, Euro buyers and those from countries that are enjoying a good exchange rate against the Euro are also capitalising on the opportunities presented by the current situation.”

Investors’ Nationality and Regions of interest in the Spanish Property Market Post Brexit

The Spanish property market has seen its overseas property investors slightly shift not only in the Spanish regions but also in the type of nationalities. This is further evidence of the enormous impact and reaction chain that Brexit has caused globally. Therefore, let’s see how regions and nationalities were impacted in the Spanish property market after Brexit.

Regions

The regions that typically attract overseas buyers are doing well. German buyers are particularly interested in the areas of Mallorca, Valencia, Catalonia and Murcia, and seem to be leading the way for overseas buyers, according to a report from Spanish property agents, Iberia Real Estate. The survey showed that German tourists continue to make up a large percentage of tourists in Spain, with over 7,900 German buyers purchasing Spanish property in 2018.

Nationalities

There has also been a noticeable increase in buyers from China and Scandinavia. Research in July from property agents, Knight Frank, also highlighted the increase in interest shown by property buyers from Latin America, specifically in Madrid; buyers from the Middle East, who favour Marbella; and Swiss buyers on the Balearic Island of Ibiza – this also points towards an evolving demographic of overseas buyers in Spain.

There has been a lot of movement Spanish property market after Brexit. If you are looking to buy or sell a Spanish property, there may be a lot of volatility that could affect your finances directly. Speak to our overseas property experts to make sure you achieve the best value for your money and that you next life-changing move is as smooth as possible.

Coronavirus and Spanish property market

Coronavirus is surely another element affecting the Spanish property market. Read the article Coronavirus: The effect on the Spanish property market to get insights on how the COVID-19 is affecting the Spanish property market. You can revisit our British Pound to Euro exchange rates pages to keep you up to date with GBP/EUR exchange rates

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