Politics and The Spanish Property Market
The results of General Elections on November 10th in Spain and December 12th in the UK will undoubtedly have an effect on Spanish house sales. Spain’s property market has already sailed through choppy political waters for over a year after the PP was ousted in a censure motion. A combination of factors including; Pedro Sanchez’s socialist party being unable to secure a majority for Government after April’s election and the continuing rumblings of unrest in Catalonia have caused turbulence to rock the Spanish economy.
Spain recently went to the polls again resulting in a further win for the socialist PSOE party led by Pedro Sanchez but there were major gains from right wing parties and he still needs to form a coalition. Sanchez will most likely look to either the PP or Ciudadanos (Citizens) party on the right, or the Podemos party on the left to form a Government. Podemos would be the socialist party’s most natural ally, however, a coalition between the two would still fall short of the 176 seat majority required.
The best outcome for Spain’s housing market would have been a majority government but a certain amount of stability has been restored and the slide in home sales and mortgage lending can, hopefully be reversed.
Traditionally British investors have shown the greatest appetite for buying homes in Spain but events since the Brexit vote back in 2016 have caused concern within the Spanish housing market, particularly in areas most attractive to UK buyers such as the Costas, Balearics and Canaries. British investment in Spanish property generally rises and falls in relation to the value of the pound, so, any UK election result reducing wealth or restricting access to Europe for British citizens (as in a hard Brexit) will cause the relationship to suffer.
Alternatively an election result that harshly affects the British economy may prove beneficial as UK investors clamour to move money out of the country. If the Conservatives emerge victorious after December 12th, at least agreements already secured would remain in place which may boost sterling, retain access to Europe for UK citizens and guarantee continued demand for overseas property from British buyers.
Some potential investors from the UK may bide their time for now awaiting further clarity, but the question is, how many have hesitated and lost since the UK decided to leave Europe? The Spanish housing market has not stood still over the last three-and-a-half years and has adapted to a new customer demographic. The exchange rate is encouragingly healthy for the pound at the moment so it seems that, should it remain so, the impact of politics on demand from British buyers for homes in Spain will prove negligible in the future.