Spain is part of the Euro-zone, which means that you will need Euros to buy property in Spain. The amount of Euros you will need will depend upon the value of the property and the size of the Euro mortgage, if any, that you use. Basically you will need Euros to pay for all the costs (property and transaction costs) that your Euro-mortgage doesn’t cover.
If you already have you funds in Euros then you will not need to buy them. However most British people buying property in Spain hold their own funds in Pounds Stirling rather than Euros, which means that have to buy Euros before they can purchase a property. Generally speaking the most expensive way to buy Euros is from your high street bank, and the cheapest way is from a specialist currency broker. The difference in price for the same amount of Euros on the same day can add up to many thousands of Pounds so this is certainly an issue to pay attention to.
To buy Euros at a competitive rate you will need to set up a trading account with one of the specialist currency brokers. This can usually be done quickly so it is not necessarily an expensive mistake to leave this until you have found a property. On the other hand exchange rate movements can be quite dramatic in relatively short periods of time so it is certainly a good idea to discuss the exchange rate outlook with a specialist when you first decide to buy and start fixing your budget. If it looks like the Euro is on a strengthening trend (getting more expensive) it may make sense to buy your Euros many months before you buy. If you place the right bet on exchange rate movements you can save yourself thousands of pounds – or increase you budget significantly. On the other hand nobody knows for sure what will happen to exchange rates in the future, not even the specialist brokers, so there will be no guarantees that you will make the right decision. Nevertheless you should look into this issue, select a foreign currency broker and open a trading account at this stage rather than in a rush later.