Three-quarters of a million Brits now live in EU countries outside of the UK and Ireland, and more than a third of these have chosen Spain as their home away from home. The latest figures from the Office for National Statistics (ONS) have found that Spain is still the main destination for British citizens living abroad, particularly among the retiring generation, with 37% of Brits abroad living there – 41% of which are aged 65 and above.
There are a total of 293,500 of us now living in Spain, attracted by the weather, leisure opportunities and Mediterranean lifestyle that many see as the ultimate goal after retirement, although two-thirds of Brits living in the EU outside Britain are of working age between 15-64.
The attractions of Spain
Marc Pritchard, sales and marketing director of Taylor Wimpey Espana, said: “Spain has so much to offer those who are retired or approaching retirement. The Mediterranean climate and diet are well suited to those looking for a healthy lifestyle, while the medical system here is also superb.
“As Spain remains the top choice in Europe for Brits living overseas, it’s important to provide accommodation that suits their preferences and budgets.”
The property market in Spain has been performing strongly since the beginning of this year, with prices increasing by 3.8% between the first quarter of 2017 and the first quarter of 2018, according to a house price index from Tinsa.
The growth was fairly mixed across the country, with the capital Madrid seeing prices soar by 17% over the year, while they rose by 14.7% in the popular tourist destination of Palma de Mallorca.
Barcelona, situated on the east coast which is a top destination for British expats, saw price growth of 11%. However, three areas recorded slight house price falls, with prices in Castilla-La Mancha down by 1.3%, Extremadura down by 0.6% and Galicia down by 0.1%.
A strong market for international buyers
One estate agent, Lucas Fox, said that 66% of all its house sales in 2017 were to international buyers, 10% of which were from the UK – which was very similar to the level seen in 2016 and proof that issues such as Brexit are not a deterrent to most.
Rod Jamieson, head of operations at Lucas Fox, said: “Falling unemployment, low-interest rates and a strong economy have all contributed to the growth in the Spanish property market. Official figures now indicate that the market has recovered from the crash of 2008 with transactions reaching pre-crisis levels in some areas.
“Overall prices, however, remain below the levels of 2007, offering attractive opportunities for investors across the whole of Spain.”
The number of million pound homes sold in the UK soared by 73% in a decade while two regions in the north of England experienced ‘exceptional’ growth in this market last year.
House price data from Lloyds Bank Private Banking revealed in 2017 the market for homes worth £1 million or more grew by 5% compared to the previous year.
And the places which saw the biggest growth in year-on-year sales were Yorkshire and the Humber, with 60% more £1 million properties being sold in 2017, and the North West where the market increased by 46%.
In the West Midlands, £1 million house sales increased by 28% in 2017. But in neighbouring East Midlands, million pounds home sales fell by 23% last year. This was the only region where sales in this market decreased.
But it was the data over the past 10 years which showed the most dramatic changes to the top end of the property market. Lloyds’ figures revealed million pound house sales in Great Britain had soared by 73% since 2007.
This included a dip in 2012, when the market experienced a poor year for sales. Indeed the first half of 2017 saw a 1% fall in £1 million plus house sales, but strong performance in the second half prompted a recovery.
Louise Santaana, head of UK wealth lending at Lloyds Banking Group explained: “Overall, 2017 was slow for the UK economy, with high inflation and low wage growth.
“But high end homeowners and investors in many parts of Great Britain are starting to regain their confidence in the market, with exceptional growth seen in Yorkshire & Humber and the North West of England.”
London was the part of the UK which experienced the highest number of transactions in the million pound market last year. But Lloyds figures revealed that growth in the high-end market had begun to slow in the capital.
Santaana thought, with this area of the market is represented strongly by overseas investors, the effects of Brexit could be putting many off from buying.
She added: “2018 will be an interesting year for the million pound property market. With the Government consulting on ways to improve the house buying process, we should see high end homeowners more empowered to engage in property transactions.
“However, the high cost of stamp duty may be an ongoing deterrent in the top end of the market, particularly for those who are looking to invest in property in order to make money, as opposed to buying a home.”
“Even if you intend to find that almost mythical ‘doer-upper’, it will still cost you to turn it around or ‘flip’ it,” says Haaris. “As a strategy, it is it fairly high-risk, time-consuming, and it requires a level of expertise.”
How do you build a property portfolio: So, what are the options?
So does that mean the end of your property portfolio dreams at the £50,000 level? Well, no. There are options out there and perhaps the most intriguing is property crowdfunding. “Property crowdfunding should appeal to any investor (even with £100 to invest) that wishes to create a sustainable and diverse investment portfolio,” says Andrew Gardiner, founder and chief executive at property crowdfunding site Property Moose.
“Primarily, our clients see the value of real-estate as part of a balanced investment portfolio but may not have the inclination or capital to participate in the property investment market directly,” he adds. “Even for individuals that have the capital to invest in their own property assets, managing properties is hard work, and property crowdfunding may be a way of removing the hassle from property investment.”
Haaris agrees and points out that a diverse portfolio reduces the risk factor when it comes to rental voids. “If your money is spread across four properties your income stream is far more predictable,” he points out.
“Usually building a portfolio would take months of careful due diligence, securing mortgages, completing the contracts, and finding tenants. With property crowdfunding, you can build a portfolio with a few clicks and you can be earning rental income within minutes.”
And with many of the headaches of being a landlord stripped out, it means that investors also avoid the property management issues that can bedevil anyone considering the buy-to-let route.
House prices across England and Wales rose a bit more quickly this month after touching a seven-month low in March but they are still expected slow this year, reflecting weak economic growth and possibly higher interest rates, mortgage lender Nationwide said.
House prices rose 2.6% in the year to April compared with a rise of 2.1% in March and in line with the median forecast in a Reuters poll of economists.
Prices rose 0.2% on the month after a drop of 0.2% in March, also matching the median forecast in the poll.
House prices are rising much more slowly than before the 2016 referendum decision to take Britain out of the European Union, which hit consumer confidence and spending as the pound’s fall pushed up inflation.
Nationwide’s measure of house prices was growing by about 5% a year around the time of the Brexit vote and the lender said on Friday it continued to expect house price growth of just 1% in 2018.
“Looking ahead, much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates,” Robert Gardner, Nationwide’s chief economist, said.
The Bank of England has said it expects to continue raising interest rates after making the first increase in over a decade in November. Investors see a roughly 50-50 chance of a hike in May.
However, a shortage of homes for sale is expected to continue to shore up the housing market.
An industry group said earlier on Friday that in 2017/18 financial year, housing starts of 154,698 were 2% lower than a record high in 2016/17.
Prime Minister Theresa May wants construction of new homes to rise to 300,000 a year to tackle a shortage of housing.
The British government and senior finance executives said they are increasingly confident Europe will offer financial companies generous market access after Brexit, boosting London’s hopes of retaining its status as a top global financial centre.
Since Britain voted to leave the EU 22 months ago, some of the world’s most powerful finance companies in London have been searching for a way to preserve the existing cross-border flow of trading after it leaves the bloc in March 2019.
“The fog is clearing … We are already seeing progress,” the City minister John Glen told the CityWeek conference in the Square Mile’s Guildhall. “The EU has now recognised that there will be some form of market access in financial services, having previously dismissed the idea.
Last month, EU states and the European Parliament formally recognised the need to discuss market access terms for financial services, having previously indicated they wouldn’t agree to a deal that would allow finance companies to operate in each others’ markets without barriers.
Britain’s vast financial services looks set to be one of the most divisive areas in the Brexit negotiations, with Britain demanding a generous deal while the EU refuses to shift from its insistence that Britain’s red lines — such as ending the free movement of workers from the EU — make that impossible.
Britain has proposed a future trade deal with the bloc for financial services based on mutual recognition of each other’s regulation. This model would be maintained by close co-operation between regulators and financial policymakers.
While EU policymakers have so far rejected the idea, saying it has never been done before on such a scale, leading figures in Britain’s financial sector reinforced their backing on Monday for the plan.
Mark Hoban, a former City minister and head of the think tank that authored the mutual recognition blueprint, said attitudes in the EU towards a financial services deal are shifting from “punishment to pragmatism”.
“Some of the views from member states who are more economically liberal, more outward looking, who regret most our departure, are much more pragmatic about out future relationship. The sands are shifting over time,” Hoban said.
Catherine McGuinness, policy chief for the City of London, home to the Square Mile financial district, said mutual recognition was the “only game in town”.
The alternative is a one-sided system whereby the bloc grants market access if a foreign country’s rules are fully aligned or “equivalent” with its own. Such access can also be terminated by Brussels at short notice.
Last month’s agreement by EU leaders spoke about “improved” equivalence, without elaborating.
Jean-Pierre Mustier, chief executive of Italian bank UniCredit Group which has operations in London, said there is a need to ensure that cross-border financial contracts and flow of data are not disrupted by Brexit, and that there is mutual recognition of rules.
“I have no doubt that the end of this public negotiation, we will find a solution… We intend to keep our team here,” Mustier said.
But Lorenzo Bini Smaghi, chairman of French bank SocGen, said that while he was also optimistic there will be the agreement in financial services, he does not expect it to be as ambitious as the mutual recognition plan proposed by the City.
Norman Blackwell, chairman of Lloyds Banking Group (LLOY.L), said even if Britain fails to gain a deal it will remain one of the most important financial centres.
“European trade in financial services to the City is obviously important… but it is not life and death,” Blackwell said.
Nevertheless, banks, insurers and asset managers are already moving staff to new hubs in the EU to be sure of maintaining links with customers there, regardless of what is agreed in trading terms.
Some EU policymakers fear that Britain will ease rules for banks in a bid to keep London as a dominant global financial centre after Britain leaves the EU next March.
Glen dismissed talk of a “race to the bottom”, a move that would make it much harder for Britain to secure access to the EU’s financial market.
While property demand has dipped in the capital, those selling in Bexley are faring better than most, according to online estate agent Emoov. It has been deemed the hottest spot for property demand in London at present in Emoov’s national hotspots index for the first quarter.
The index considers homebuyer demand levels based on the balance of stock listed for sale on major property portals compared with the stock that has already been sold.
3. Barking and Dagenham
7. Waltham Forest
While Bexley, Bromley and Barking and Dagenham were deemed hotspots for property demand, there were other areas which reported the largest rise in demand since the fourth quarter.
Hammersmith and Fulham had the biggest increase in buyer demand – up 43% since the fourth quarter of last year. That was followed by Newham and Kensington and Chelsea, and then the City of Westminster, up 30% and 17% respectively.
1. Hammersmith and Fulham
3. Kensington and Chelsea
4. City of Westminster
Emoov founder Russell Quirk said:
There are plenty of pockets across the nation that continue to see strong levels of buyer interest, however, market uncertainty has seen many sellers refrain from selling and in turn, the lack of varied stock has seen buyer demand remain restricted for the large part.
As we now enter the busiest period of the year for home sellers and buyers, we should see demand across the board stabilise and along with additional factors, such as the intended improvement in the regulation of estate agents, confidence will start to return to the UK property market.