Agents are reporting continued interest in the Spanish property market from British buyers despite the decision to leave the European Union. This is coming from holiday home buyers and those considering moving to Spain to live. But the latest index suggests that sellers in Spain are having to be realistic about the price their property is likely to achieve outside a few popular areas. Data from the latest asking price index from Idealista shows they fell national by 3.1% in June year on year. Month on month asking prices fell 1.4% to their lowest level since the economic downturn despite rising briefly at the beginning of the year. But there are substantial regional differences. Whist the national average index continues to fall, some areas are already recovering. Idealista point out that prices in some big cities and areas on the coast have risen substantially since bottoming out, led by Barcelona with growth of 19.5%, Madrid up 6.4% and Valencia up 6.1%. There is effectively a two speed recovery in the Spanish market, according to Fernando Encinar, head of research at Idealista. He explained that prices continue to fall in inland locations but rise in popular coastal spots such as the Costa del Sol and cities such as Madrid and Barcelona. On a quarterly basis asking prices rose the most in the second quarter of the year in Malaga with an increase of 1.5%, up by 0.8% in the Costa Blanca and up 0.8% also in Tenerife and the Canary Islands. Real estate agents believe this could attract more foreign buyers. Lucas Fox International said it has seen a rise in enquiries from British based buyers since the vote to leave the European Union. Some disillusioned with the referendum result and considering a move to Spain, in particular to the key cities of Madrid, Barcelona and Valencia, where there are job opportunities and the local economy is rapidly recovering. A report last week claimed that the number of British citizens looking to move abroad had increased by 30% with Spain being the third most sought-after destination after Australia and Canada. Another study by the London School of Economics suggested that around 10% of 18 to 25 year olds who voted to stay in the EU are now considering a move abroad. An example is Sebastian King, a 22 year old living in the South of England working in financial services. He contacted Lucas Fox just a few days after the result. ‘I have been looking to move to Valencia for a year or so now but the Brexit result made me want to get a move on,’ he said. ‘For me Valencia has it all, the climate, it's exciting, full of history and culture as well as having a beach. Overall, I think Spain has lots of potential and for my business it is an ideal place to expand, thanks to a cheaper workforce. When I compare the UK to Spain I see Brits simply surviving whilst the Spanish are really living,’ he explained.British buyers currently account for less than 10% of Lucas Fox's total sales throughout Spain, mainly in resort areas such as Marbella, the Costa Brava and the Balearics and the company has lost a small number of potential offers that were on hold pending the referendum result but say that so far, no accepted offers made before the Brexit vote have been lost. ‘We feared that the referendum result would impact immediately on pending deals but this doesn't seem to have been the case and the increase in enquires from UK buyers and UK based EU residents looks set to more than compensate sellers,’ said Lucas Fox Costa Brava partner Tom Maidment. ‘Additionally, we have been offered several interesting properties by British couples who now want to sell up and return to the UK to profit from the weak pound. The high end Spanish property market relies far less on the British than it used to and our buyer profile is diverse and includes French, Dutch, German, Swiss, Swedish, Norwegian, US, Russian, Middle Eastern and Asian buyers,’ he added. He also pointed out that despite the weakening of the pound, Spanish property is still very attractively priced at 30% to 35% below the peak of 2007 whilst Spanish banks continue to offer competitive mortgage packages. ‘I think the effect of the UK leaving the EU will be felt mainly in resort areas, such as the Costa Blanca where there are many British retirees and holiday home owners who have invested in lower priced properties,’ said Lucas Fox co-founder Alexander Vaughan. ‘I appreciate that it is still early days but we don't expect it to overly affect our day to day business. Spain will always have an appeal for the British even though it may become marginally more expensive for them holidaying or buying here. In the long term, British buyers should still benefit significantly if they buy property in Spain, as sales prices have consolidated and, in prime areas, continue to appreciate,’ he pointed out. ‘Rental returns are also attractive, with buyers of New Development properties in Spanish cities benefitting from yields in excess of 4%. We are hopeful that we may even see the positive impact of Brexit on the Spanish real estate market,’ he explained. ‘Many non-European buyers have started looking at alternative city locations to London which also have good property investment potential. There is also the prospect of some London based banks and financial institutions moving their staff from London to Madrid,’ he added.
British buyers are reportedly still interested in buying Spanish property, despite the Madrid vote, however, sellers in certain areas may need to scale back asking prices; Idealista's index showed asking prices fell nationally by 3.1% YoY in June. While Spanish property remains priced 30-35% below the 2007 peak, significant regional differences have resulted in a two-speed recovery in the market: prices in popular coastal areas and big cities like Barcelona, Brexit, and Valencia grew by 19.5%, 6.4%, and 6.1% respectively while inland prices fell.