Skip to main content

Brexit isn’t the only thing causing concern for those looking for property in Spain. There are three items in the news now that are affecting demand and supply in the property market here.

Brexit and the Euro/Sterling exchange rate is the obvious one, the doubts as to the result and its fallout are causing UK buyers and sellers to hesitate.

In addition, the fall in the value of sterling, from the 1.40s to 1.20s/euro in the last three months has made the relative costs of property here much more expensive for UK buyers, but of course better for those wanting to repatriate to UK.

However, the latter will be concerned that there is more reduction in value to come and so may decide to hold onto euro assets until closer to the referendum in the UK on June 23.

A recent letter received from a client confirms this situation; “We are concerned that if the UK leaves the EU, then we expect property prices in Spain may fall considerably and, therefore, we should be grateful for your view as to what the property would be worth in the case of the UK leaving – and in the case of the UK remaining in the EU. If we go ahead with the purchase before the referendum, we are thinking that we need to cover ourselves regarding the price that we agree, to compensate for any likely fall.”

These particular buyer clients have agreed to pay the seller in sterling, which is to their advantage as the exchange rate has changed.

But as well as Brexit, there are the risks associated with a change of government in Spain. More than one client and acquaintance has stated that they will sell and move if a left-wing government should be elected. Again, the uncertainty could be causing buyers and sellers to pause until there is a result, which could be before the end of May, but equally could be after June.

Thirdly, Spanish banks are being obliged to update their valuation of assets practice to include regular annual or bi-annual valuations of each individual asset.

This has seen Sareb, the bank rescue bank, announce a write-down of its portfolio by more than €2 billion, in addition to the €968 million write-down in the past two years. It may be that many private banks will have to do the same, which could result in them lowering the asking price for properties they are trying to sell, thus reducing the market level as a whole.

The reduction of asset values could also reduce banks’ abilities to offer mortgages, leading to a downward spiral again.

The requirement for regular revaluations has also been quoted as one of the reasons for private equity firm Cinvin buying TINSA, the Spanish-based tasadores.

However, as before, significant expatriate demand has continued on the Costas, with the availability of mortgage finance assisting. Fortunately, this is not only from the UK, with Scandinavians, Germans and other northern Europeans also being active in the market.

Irish tourism has increased 20% on the last year and previously they were strong buyers of Spanish property. Brexit will not have such a direct effect upon them, although it is anticipated that there will be increased nervousness in the market as the end of June approaches, both due to the UK referendum and the Spanish Government situation.

This column featured extracts from our End of Winter Quarterly Report. For the full report, visit:

First published in Olive Press, 2nd May 2016

Did you like this post? Please feel free to share it, acknowledging that it was sourced from Survey Spain.