THE fall in the pound Sterling and uncertainty about the UK’s future has seen British demand for second homes in Spain plunge.
Spain’s Association of Land and Commercial Registrars revealed last week that British demand is down nearly 30% on last year’s pre-referendum levels.
From 2012, British property purchases were increasing in Spain by an average of 20% each year.
But now, the new report shows sales to UK buyers were down for the first quarter of 2017, from 2,800 to 2,000.
The pound is down 10% compared to pre-referendum levels, meaning a €300,000 villa, which would have cost a UK buyer £229,000, will now cost them £254,000, a £25,000 increase.
The issue is made worse in areas of surging prices, including Barcelona.
Mallorca, which is also experiencing an increase in prices, has managed to offset the damage, as the majority of its buyers come from the German market.
Additionally, growing Swedish and Turkish investment has managed to offset the drop in British interest.
Alfredo Millá of the Sonneil property agency, covering Alicante and Murcia, said the weak pound isn’t the only reason potential buyers are becoming reluctant.
“There’s a general air of uncertainty, especially about whether they will be entitled to healthcare,” he said.
British cash buyers looking for a relatively modest place in the sun are said to have been the hardest hit.
“The pound-euro exchange rate has a bigger effect on people at the lower end of the market, in the €200,000-€400,000 price range,” said Chris Clover, head of Panorama Properties in Marbella.
“Those with more money can take advantage of low interest rates to hedge against the weak pound.”
Hence ‘hot markets’ including Ibiza and Marbella are still thriving, as luxury buyers remain largely unaffected.
Spain is also benefiting from Chinese and Turkish investors.
Both groups are interested in the new gold visa scheme, which grants residency for anyone who invests more than €500,000 into property, assets or business, and which brought €2.6 billion to the economy last year.