Brexit Weighs on British Appetite for Spanish Homes

Brexit remains a constant source of worry and uncertainty for many people. But, with the overall economy apparently shrugging many of those fears off, it can be hard to accurately measure the true impact of the referendum on Britons’ spending plans.

A recent survey from the Second-Home and Resort Industry Home Observatory (SHARIO), however, has managed to capture just that and its insights aren’t great news.

According to Mark Stucklin, a property market analyst at SHARIO, demand for Spanish property from British buyer has fallen sharply. Third quarter data from the Spanish Association of Land Registrars shows a 16% on-year decline in the number of British home purchases of Spanish property logged with the Land Registry. That’s the first decline in purchases by Britons in more than three years.

Anecdotal evidence, based on a survey by SHARIO of estate agents and property professional in Spain who specialise in working with British buyers, confirm the reason – Brexit. The results of the survey highlighted the weak pound as the main reason for fewer sales of Spanish homes to Brits, and a larger number of withdrawals from previously agreed deals. Uncertainty over the implications of Brexit was also a significant deterrent for making a purchase, and not just for Britons, but potential home-buyers from other countries too.

“The overall picture is one of a big decline in British buyer interest in the months leading up to, and just after the referendum,” Mr. Stucklin said.

However, the report also suggests that now things have settled a little and the pound has made a mild recovery, interest from British buyers may be stabilising. However, budgets have been affected and many potential buyers are coming in with less to spend than they discussed prior to the referendum. While that may offer a little reassurance to some agents, others are less sanguine. “You can forget about the British market for at least a year,” was one agent’s response to SHARIO’s survey.

While potential Spanish property buyers have been spooked, owners who are selling have become more flexible on price – a necessity in order to secure a sale amid the Brexit-related uncertainty.

Despite the fall in British purchases of Spanish homes, they remain the biggest proportion of foreign home-owners in the country. Indeed, British activity played an important role in the recovery of the Spanish property market following the 2008 crash.

And, even if sales levels of Spanish homes to British buyers ends up falling 50% from 2015 levels, Mr. Stucklin says they will still represent the largest foreign interest in Spanish property.

“Will British demand ever return to the level it reached at the end of 2015,” Mr. Stucklin says. “I imagine so because Brexit has not changed fundamental preferences, just circumstances. But who knows how long it will take.”