Spain statistics

Brexit's full 2016 effect on Spanish property

We now finally have the full 2016 property price data, which can allow us to advance another step in understanding the issue from my previous post "Post Brexit - how much exactly is Costa del Sol real estate affected".

The prices in the 4th trimester of 2016 rose by half a percent compared to the previous quarter, and reached 4.5% for the year for resale properties and 4.3% for new construction. The updated graph is below:

As you can see, 6 months after the Brexit referendum, the effect from the reduced number of British buyers has not been transmitted yet to property prices. In another previous post, I mentioned: "an interesting datapoint is the percentage of foreign buyers: 13.5% of property purchases in 2016 were by foreigners. British buyers were lower compared to 2015, as expected, from 23.9% to 16.4%, however still ahead of German and French buyers at 9% and 8% respectively". As an explanation I would offer that demand from other nationalities has picked up the gap from British buyers. We at HBC have noticed as much, especially Scandinavians and French.

As an alternative explanation for the increase in Spanish property prices, rather than the expected decrease, we could look at the GBP exchange rate. As you can see below, it has dropped like a rock after the Brexit result and has languished near 1.13 for a while now.

(graph from http://www.xe.com/currencycharts/?from=GBP&to=EUR&view=1Y )

However, regardless of what final decision is taken (this poster does not speculate politically!), it seems that there is strong support at the 1.10 point. Currency money managers are usually ahead of the game and I look to hints in their behaviour to try and predict the future. Note how the volume graph shows that there were hardly any trades of currency at the lowest points - noone willing to sell more? Rising volume on the up and declining volume on the down, that in my humble opinion is a sign that the currency managers do not expect further British pound declines. Property buyers want stability so that they can arrange their budgets, and this stability at an albeit lower level is perhaps the reason why British buyers are still interested.

A third reason of course may have nothing to do with Britain and simply be lack of alternatives in a terrified world for retirement/holiday properties.

In any case, it seems that prices are rising despite the "wall of worry" being climbed by the market. This month will be decisive for Brexit and we are eagerly awaiting final decisions so that we can finally get through to the other side!

Thanks for reading.

Always on the lookout for possible trends! And trend changes.

I have been looking at price data for Costa del Sol properties lately to confirm or reject the rising trend of 2016. I then realised that I could get an advance hint of the possible future price behaviour by looking at the supply side. As we know, the price is a function of supply and demand. As we have seen on previous posts, the demand has been steadily rising from Scandinavia, France and Germany, even though it has clearly dropped from the UK. Overall sales have increased. By looking at how the number of properties has changed with time, we can try to identify any trends to get a feel of probable future price movement.

I will simply put the graphs and datatabes here first and analyse them below.

Number of villas on the market in Costa del Sol:

Number of townhouses on the market in Costa del Sol:

Number of apartments on the market in Costa del Sol:

I hope you can agree that there is a clear downward trend in the number of all three types of properties in the market since 2016. I would assert that, given the fact that sales have not decreased and in fact have risen, the price is likely to go up as supply of available properties in the market goes down. Obviously this would bring more properties in the market as more owners are motivated, but the point is to show that we may be witnessing the beginnings of a new dynamic in the market. Coupled with my previous post on how many of price changes are currently increases rather than decreases, this indicates to me that the probabilities of increased property prices are higher.

For more details and further confirmation you can check out our graphs on our website, the trend is similar accross the board, from Sierra Blanca villas to Marbella apartments.

Looking forward to your comments, I hope you enjoyed this post.