Spain has just had another General Election in which the parties on the right gained some ground and in which the PSOE and Podemos parties finally agreed to join in a minority coalition. The UK is preparing for a General Election in December where a Conservative victory is the most likely outcome but a hung parliament and a Lib-Lab-SNP coalition is also a very real possibility.
Political uncertainty in the Spain and the UK
Political uncertainty in both countries is likely to have an impact on the Spanish property market for 2019. The policies of the newly formed Spanish government will either help to improve the Spanish property market or will be the cause of further uncertainty. With a PSOE / Podemos coalition, it looks like the left may seek to intervene in the Spanish housing market in order to control rents and decrease property rights for landlords.
And with British demand for Spanish property having been the strongest among international investors in areas such as Andalusia (Malaga / Costa del Sol), the Community of Valencia (Alicante / Costa Blanca), Murcia (Costa Calida), the Balearics and the Canaries, a fall in demand from UK buyers will be felt immediately, as it was just after the Brexit referendum in 2016, when UK demand fell for two consecutive quarters.
The British buy property in Spain as a retirement or second home and demand is usually up and down depending on the strength of Sterling and confidence or lack of in the strength of the British economy.
With a General Election looming in the UK, it would appear from the increase in the value of Sterling against the Euro that the bets are on for a Conservative Government which would mean “getting Brexit done” and the implementation of a deal which was agreed by Theresa May and subsequently tweaked (or twerked) by Boris Johnson. The increase in value of Sterling against the Euro is the best scenario for maintaining British demand for Spanish property.
A General Election result which weakens Sterling and, as a result, reduces British wealth will likely result in a decline in British demand for Spanish property. This may occur if there is a coalition in the UK between left parties. Furthermore, it is likely to result in further uncertainty as it may lead to more confusion and referendums on Scotland and Europe.
Total House Sales in Spain
Total house sales in Spain continue to be on the general increase. Monthly house sales in Spain still remain consistently above 40.000 units and the demand for Spanish property by foreign nationals has remained steady between 16% and 17% for the last seven quarters according to the Spanish National Institute for Statistics, INE.