UK EU-referendum implications for Spanish property market

Latest opinion polls: UK referendum on remaining in the EU (click to enlarge)

Latest opinion polls: UK referendum on remaining in the EU (click to enlarge)

With the UK’s referendum on EU membership looming on the horizon, here are my thoughts on how the result might affect the Spanish property market, and British demand in particular.

The UK’s 23rd June referendum on EU membership is a big deal for the Spanish property market because British buyers are the largest group of foreign buyers by far , and British demand, which may have already started to cool on fears of a “Brexit” (vote to leave the EU), will be sensitive to the outcome. There’s a lot of money at stake for the Spanish economy.

British demand for property in Spain grew strongly last year on the back of a strong pound and attractive Spanish property prices. Buyers from the UK were the biggest group by a wide margin (21% of the foreign market – see chart below), and increased the most – up by 42% last year. In some regions like Alicante (Costa Blanca) and Malaga (Costa del Sol), the British dominate the market.

spanish property sales by nationality 2015


However, in the lead up to the referendum the pound has fallen substantially against the euro (so you know what the currency markets think of the UK’s economic prospects outside the EU), and British people thinking of buying in Spain have a good reason to wait and see what the result is before taking the plunge.

The following chart illustrates how the pound was strong for most of last year – frequently above 1.40 – and has fallen around 10% this year to around 1.25, with obvious implications for British buyers and their budgets.

Pound-Euro exchange rate

Pound-Euro exchange rate

It’s not just worries of a weaker pound that might deter British buyers in Spain. A Brexit result would raise big questions for British expats and property owners in Spain (affecting issues such as taxes, residency rights, pensions, freedom of access, health care, and so on), which could take years to sort out. Nobody likes uncertainty, so the referendum is bound to be giving British buyers pause for thought.

All this suggest that British demand might go soft in the first half of the year, at least until the referendum is out the way. There are no statistics out yet to shed light on this question, but anecdotal evidence like this sale falling through suggest that a percentage of British buyers have decided to sit on the sidelines until after the referendum. If the number is big enough vendors and agents in areas popular with the British might notice it.

Will it be enough to affect the market in key areas and take the wind out of the recovery in those areas? I wouldn’t rule it out. However, the latest sales figures from the notaries for February were reassuring, with sales up 23% in February. If British demand was down at the start of the year it wasn’t enough to have a noticeable impact on the overall sales figures, though one has be careful interpreting aggregate figures and making assumptions about British demand.


If the referendum ends in a Brexit result (vote to leave the EU), it will be bad news for the Spanish property market and British owners of property in Spain.

The implications of a Brexit are complicated for expats and holiday-home owners, and the pound might fall even further, given what the currency markets are already saying about even the possibility of a Brexit. None of which would be good for British demand for property in Spain. Remember, the British are the biggest group of foreign buyers by far, so a Brexit would be a negative shock for the market that could last several years or more. It would be bad for vendors, businesses, the expat community, you name it.


If the British vote to stay in the EU, then all the uncertainty holding back demand could evaporate on the day of the referendum. I would expect the pound to rally, and all those Britons who have been sitting on the sidelines to come stampeding back into the market. It could be a great second half of the year for home sales in areas popular with British buyers.


How will the British vote? Many of my friends are strongly in the out camp, and that is the opinion I hear the most from my own circle of acquaintances.

However, I believe the majority of British people will vote on the day for their favourite devil – the one they know. I don’t think the British have got the stomach for a big change like leaving the EU, and I will be very surprised if the result is a Brexit.

The latest opinion polls (see chart at the top) suggest the remain camp is still slightly ahead by 48% to 41%, but opinion polls are fickle and can change fast. I think betting odds are more reliable than opinions polls as someone is putting their money where their mouth is. According to Betfair, a remain result is still odds-on favourite at 1.4 (bet of 10 wins 4), compared to 2.7 for a leave result (bet of 10 wins 17). The leave odds have fallen a bit in the last week (from 2.87), but the bookies are still clear who they think is going to win. And if they are right, I suspect the result will be most welcome on the Spanish coast.

Costa Brava coastline, where a UK referendum vote to stay in the EU will have a positive impact on the property market

Costa Brava coastline, where a UK referendum vote to stay in the EU will have a positive impact on the property market



5 thoughts on “UK EU-referendum implications for Spanish property market”

  1. Profile photo of markirlandamarkirlanda

    As an expat, it´s easy to recognise the benefits of staying in the EU, and therefore perhaps one can be fooled into a false sense of security that Brits in general prefer the devil they know. However, most of us have not been living in the UK for many years and we fail to recognise the current sentiments back home. Recent events (massive immigration to the EU, terror attacks, Brussels´plans for EU centralisation etc) do nothing to convince the UK population.

    1. Profile photo of Mark StücklinMark Stücklin Post Author

      Fair point. However I still think the remainers will win, based on the polls, betting odds, and the strength of the coalition of interests on the remain side (most of the Government, most of the opposition, big business, unions, etc.).

  2. Profile photo of Chris NationChris Nation

    I feel something of a rat-fink. Or, looking on the positive side, I’d make a great double agent. One one hand I want the result that benefits me, personally, the most. That involves a strong GBP v Euro, no changes to pensioner rights to the Sp NHS and other benefits, eg no cap gains tax for over 65’s … So that means staying IN. I think.

    But I do not believe in the European project as it is now and as it is evolving. The Franco-German plan – fiscal as well as monetary union, a.k.a. The United States of Europe – is bonkers, given the continuing parlous state of the southern european economies. The Euro-crisis can has been kicked down the road but, some time after the UK vote, will become a major issue once again. As has the poster about GBP being over-sold, I recommend Mark Mardell’s piece on BBCi for an overview of this.

    An INist on BBC2 Newsnight a couple of nights ago burbled on about ‘selling our cars to the EU’ and how being out would muck that up.

    ‘Our’ cars? The Nissan Interstar van is not Japanese: it is a Renault Master, as is my Vauxhall Movano but with a Vauxhall badge. In Germany it is sold with another GM badge, Opel. Who owns the majority shares in Nissan? Renault. And who owns the majority of Renault? The French Gov’nt! So a Vauxall/Opel Movano or Nissan Interstar is a French Gov’nt product! That’s cheating! That’s the EU for you.

    Fords are made piecemeal all over Europe, including Valencia. The only UK-made Ford parts now are transmissions at Halewood and all Ford diesel engines, at Dagenham.

    Escorts and Transits are made in Belarrus. Current Transits are made in Turkey. Focus and Modeo are made in Russia. Not an Eu member between them. In fact, Russia is a major headache for the Eu, with no EU agreement on how to deal with the cunning and dangerous Putin.

    R-R is owned by BMW, Bentley is owned by VW. Jaguar Land Rover, producing those most English of vehicles, is owned by Tata Motors of India.

    James Dyson promised not to move production out of UK. Dyson products are now made in Malaysia.

    Do the INists believe that major international corporations, with these serpentine global industrial connections, will allow any of their production sites to be frozen out by red tape from Brussels?

    Business will go where business does best. And that, in the final analysis, is what it all comes down to.

  3. Profile photo of RuckosRuckos

    On the Andrew Marr show, a couple of weeks ago, Norman Lamont (Brexit), said the NHS deal with Spain was a separate treaty not dependant on our being in the EU. If this is the case, then hopefully this will allay the fears of ex-pats. I have not evidenced this yet, but I hope this is accurate

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