Posted on 12 April 2017
If you want to budget ahead with confidence when purchasing a property in Spain, you should be aware of several things when it comes to managing your currency exposure:
- The cost of your Spanish home will be impacted by the value of the pound in relation to the euro: the stronger the pound the more affordable property will become and vice versa.
- The value of the pound is constantly fluctuating under the influence of political and economic factors, and will do so between the time you make an offer and complete your purchase.
Something British buyers of property in the Eurozone were only too aware of after the EU referendum, having been left with a dent in their budget when the Brexit vote caused the value of the pound to head south – adding a few euros to the cost of their dream home in the Spanish sun.
However, as Theresa May finally pushed the exit button by triggering Article 50 – paving the way for Brexit negotiations to commence – the pound confounded expectations. Rather than seeing a repeat of the dip in value experienced post referendum, sterling was actually able to head north towards the £1=€1.18 mark, a good 2 cents above the March average – a durability that can be attributed to Article 50 already being “priced in”. In layman terms this basically means that unlike the surprise result of 24th June, Article 50 was expected, so it wasn’t a shock to the system. It also meant that a £200,000 property cost around €3,000 less than it would have in the days leading up to the big day – that’s the new patio paid for!
What does the future hold?
So what does the future hold for Brits with currency requirements in Spain? In the short-term it’s worth noting that historically the pound tends to rally against the euro in April. No one is 100% sure why, but once again it seems to be working its magic for the pound. Looking slightly further ahead, the upcoming French presidential election in May and the rise of extremist candidates like the far-right, anti-EU Marine Le Pen is creating political uncertainty that the pound has been benefitting from as the euro comes under pressure.
Yes the pound will be looking over its shoulder in the coming weeks and months, as the two-year period of negotiations between the UK and EU kicks-off – a sensitive process that will seek to resolve a number of key issues, including residency rights. But all things considered it has shown an impressive resilience in the face of adversity, which will benefit British property buyers in Spain. Combine this with a rapidly recovering Spanish economy and rising house prices across the country and you have favourable conditions in which to make your dream a reality.
If you are still concerned about living in Spain after Brexit, download the Spain Property Guides explanation of potential post-Brexit scenarios.