Spanish Property Insight › Forums › Spanish Property Forums › Spanish Real Estate Chatter › Will higher UK interest rates affect Spanish property prices
- This topic has 4 replies, 5 voices, and was last updated 9 years, 11 months ago by angie.
June 28, 2013 at 9:36 am #57640grinningdogParticipant
The incoming Governor of the Bank of England seems to be signalling an end to very low interest rates and some are predicting 3-4% interest rates.
I wonder if that will be a factor in Spain. If I can get a safe 4% on my money do I really want the risk of a Spanish property? Yes, prices might recover in the long-term but how long till we see another boom and land-grab?
Or will many people adopt a “love the country, love the life, love the people, sod the investment” approach.
I think UK interest rates will be a factor for many. All the more reason why the Spanish government needs to build confidence in SPAIN, not just trying to recover house prices, or fleece an easy target.
June 28, 2013 at 9:56 am #116923AnonymousParticipant
Spanish Government do not work on such reasoning. The Spanish property is much larger & much complex and little relation to UK interest rates. However all things being equal increase interest rates in UK will make the pound stronger & in turn a pound will buy more €. i.e. the properties will look cheaper on exchange rate measure.
June 28, 2013 at 12:13 pm #116924angieBlocked
Good question Grinningdog.
This is my view only, and based on how I think it would affect me.
If UK rates rose and being one of the millions of Savers who’ve put up with low rates for years, I would be happy for rate rises and would not be interested in Spanish or any overseas property investment. Plus, I would invest in the UK! As for an investment abroad, I’ve always questioned this as everyone knows and due to the high transaction costs in buying and selling overseas property. A healthy deposit account does not incur such transaction costs, money is protected up to £170k for a couple, so if people have more this can be spread around safely, no worries about break-ins, community fees, repairs or exchange rate worries etc.
I do not see the return to the heady boom days ever again and not in such numbers, I think too many people got burnt, but, I think a normal market of foreigners from colder climes moving there or possibly a holiday home, but even that I question comparing capital outlay and worries of security with having lots of holidays to hotels, villas, apartments etc and anywhere too, not just the same place.
Others will have different views no doubt 😉
June 28, 2013 at 1:09 pm #116888AnonymousParticipant
I actually agree with you Angie in principle. Unless you are thinking of selling up in UK living there permanently or semi -permanently -because if you become Spanish Resident and are over 65 after 3yrs you can sell CGT free and move anywhere -even back to UK Otherwise the problem is with the European Union -in Brussels they need to stop messing about with harmonising things likecar exhausts and start on a level field for Inheritance tax so you only pay it in your own country for a start. Getting things changed in Spain needs a lot of lobbying of Euro MP’s. Problem is they don’t want want to know -only doing their job and getting their money.If things get really cheap -maybe they are in some places you could just be philosophical -if its a nice spot where you are happyto go to every year just enjoy it stick to 182 days and make a Spanish will spreading it 7500 euros a time widely !
June 29, 2013 at 6:14 am #82641DBMarcos99Participant
Higher interest rates generally, will directly affect the UK south-east property market more than Spain, imho.
Generally there has already been a price crash in Spain, and a lot of buyers that are left in the market are cash buyers so are not affected by interest rates. In the UK south east, with record low sales volumes and prices at an unsustainable high, something will have to give.
It may be of course that the pound is allowed to depreciate further, instead of raising interest rates. In either scenario, numbers of British buyers in Spain is likely to fall. Which is one reason among others, why Spanish developers and agents are targeting Russians, Moroccans, Chinese etc.
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