Housing Update August 2016

In August 2015 the UK pound would buy €1.37! Today it trades at €1.20!

Last year in July the pound had peaked at €1.44 – it had been climbing for several months, falling back to €1.26 in March 2016 prior to the EU Referendum.

In the days leading up to 23rd June, the pound climbed a little to €1.31 as the currency markets anticipated the UK would vote to remain in the EU. The polls predicted wrongly and the pound fell back to €1.15 a week after Brexit.

A strong pound is not always good for an economy; it makes exports expensive and imports cheaper, causing a balance of payments deficit. The same principle can apply to Spanish property sales as I will explain;

A large proportion of properties for sale in the area are owned by British expats. After checking our recent sales, it reveals around 65% of those vendors were repatriating the proceeds of their property sale back to the UK. With the exchange rate working in their favour, many of those vendors were happy to take a 10-20% reduction on their property price and still convert their funds into the same amount of UK pounds that they would have had if they'd accepted the full price for their property when the exchange was at €1.44!

Last year when the pound was very strong, owners repatriating to the UK were not only very reluctant to accept an offer, but a considerable number were actually increasing the price of their property in anticipation of a sale which would result in them having to pay €1.44 for one UK pound! In effect, buyers, this time last year, were not getting better prices due to vendors holding out for the full asking price.
Post referendum, there has been a slowdown in forward bookings for September and October, but presently there are still many prospective buyers in rental and hotel accommodation looking to find their Spanish property bargain. Walk-ins are a daily occurrence.

August has traditionally been a quiet month due to holidays, but, as the dust settles and the initial shock of Brexit fades away, buyers will return. We anticipate our diaries for September and October will eventually begin to fill-up.

Most currency market analysts are predicting a weaker Euro by the end of the year, due to an anticipated Italian Banking crisis and poor productivity figures for 3rd and 4th quarters. Germany, France and Italy are suffering particularly and the UK will see higher growth than most of Europe according to the IMF.

If you want to take advantage of the low pound and put your property on the market for a quick sale, now is a good time to contact an agent.

Kenneth Whettall
Commercial Director
Fuente Alamo Real Estate/Murcia Coast & Country
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Tel 0034 968 598 173