Malaga Estates market situation after Brexit
Nine months after the UK referendum, the British prime minister Theresa May announced she will trigger Britain’s formal exit from the EU on 29 March 2017. Negotiations on Britain’s future will continue for at least two years, which (sadly) leaves us with a long period of uncertainty still to endure. Please read what Malaga Estates – your Malaga real estate specialist – thinks about this situation based on information obtained from several property portal resources.
The process will have an unavoidable impact on the Malaga estates for sale: One in five foreign buyers are British, and any fall in their activity is likely to have a noticeable effect on Spanish house sales.
The only tangible effect of the Brexit vote in 2016 was a fall in the value of Sterling. This may have impacted British budgets, but buyer enquiries remained at record highs. With reduced spending power, buyers reacted by adjusting their searches: Smaller properties and cheaper locations became winners.
In February 2017 everything changed. British traffic remained at all time highs, but enquiry growth stalled. UK buyers adopted a “wait and see” policy as Brexit negotiations drew nearer.
Notable Brexit effect: Malaga and Mallorca given way to much cheaper Almería and Valencia
Foreign demand is still overwhelmingly for sun and sea. This ranked analysis of our buyer enquiries shows coastal locations in vogue, with Alicante firmly at the epicentre of foreign sales. There have been notable movements though:
The Canaries have risen strongly up the rankings this year, while highly priced Malaga and Mallorca have given way to much cheaper Almeria and Valencia. This is a notable Brexit effect, and attracting more Europeans will be key to boosting locations weighed down by higher than average prices.
New buyers of Malaga estates and in the rest of Spain
Most market statistics break buyers down by country, which puts the UK forever in top spot. This creates a skewed view of Spain’s reliance on British buyers. In reality, 4 out of 5 buyers are not British. When grouped, our data highlights that European buyers – up over 50% year on year – deserve much more attention. Unlocking sales in Europe will be key to beating Brexit in 2017/18.
European buyers vastly outspend the domestic market. The last full year report by Spanish Notaries showed that while Spanish buyers paid on average €1237/m2, their German counterparts were paying €2149/m2. This presents a double opportunity for agents who can service the European market: They will close more sales, at a higher price.
It would be tempting to think that foreign buyers with increased spending power are all millionaires, but that is illusory. High end homes over €500k form a very small part of the market – just over 5%. Unsurprisingly there is much more activity in the sub €50k bargain range, but the sweet spot is in the middle: Right now, over 60% of foreign buyer enquiries are for apartments and villas in the €50k – €250k range.
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Who are currently buying Malaga estates?
The richest Eurozone and Nordic countries are driving growth among European buyers. Italians have been particularly strong over the past year, briefly overtaking UK buyers as the single largest nationality searching for Malaga estates. Unlike their British counterparts, European buyers tend to be a little younger and the in 45-55 age range. Long term investment and relocation are more likely to drive these buyers than thoughts of retirement in Spain.