Brits are being lured back into the Spanish property market where prices in some areas have fallen by up 70 percent. An article in the Telegraph recently gave examples of a four bedroom "luxury seafront villa" close to two airports reduced from 2.1 million Euros to 650,000 Euros. Another villa in the same article in Mosa Trajectum had been reduced from 245,000 Euros to 125,000 Euros.
An increase in consumer confidence in the UK and a want for guaranteed sunshine is driving this resurgence in the Spanish property market. People can see the value in property being offered at rock bottom prices by Spanish banks desperate to offload the large number of repossessed houses they have on their books.
Search information provided by RightMove Overseas shows that Spain is currently the most popular prospective destination for a holiday home. Interest in property based in other countries hit badly by the recent financial crisis such as Cyprus have also risen.
These countries still have their problems but as long as you are financially self sufficient the lifestyle these destinations can offer is incredibly appealing. The culture and climate attract many Brits.
Euro Exchange Rate
Although property prices have fallen by up to 70% the pound Euro rate has also changed dramatically. Before the financial crisis figures supplied by oanda.com show the average interbank GBP/EUR bid rate in July 2007 was 1.4817 whilst the average GBP/EUR rate for last month was 1.1734 (June 2013).
If we use the property price mentioned above which fell from 245,000 Euros to 125,000 Euros we can see how much the overall cost of purchasing this house in pounds has changed
*Figures supplied by oanda.com
If the property costing 245,000 Euros had been purchased in 2007 at a GBP/EUR rate of 1.4817 it would have cost £165,350.61. After the financial crash and the cost in Euros fell by 49% the actual cost to the UK buyer would have only fallen by 35.57% due to the decrease in value of the pound. The property would cost £106,528.04 in June 2013 £58,822.57 cheaper than the initial cost.
If you are considering buying a property within the Eurozone, the GBP/EUR rate will have a huge impact on your disposable income whilst you are abroad. Unfortunately a great number of retired expats have recently had to return to the UK as they could no longer afford the lifestyle they had become accustomed to thanks to the decreased value of the pound.