Are you thinking of buying a property in Marbella in 2016? Well, whether you’ve got your eye on a €180,000 apartment in Nueva Andalucía or an €85,000 apartment with a garden in Mijas Costa , you may already know how advantageous a strong exchange rate is…
After all, if the pound to euro exchange rate is flying high, you get more euros (when you transfer money from the UK to your Spanish bank account) towards buying a Marbella property. That said, in the light of the Brexit, what’s in store for the exchange rate in this 2nd half of 2016? Let’s take a look at the possible options.
- To protect yourself against sterling volatility, you can set up a forward contract.
The first possibility is that, following the UK’s vote to leave the EU on June 23rd, sterling will bounce up and down versus the euro. After all, in the last fortnight alone, the pound has wobbled between 1.17 and 1.23 against the Eurozone’s common currency. Fortunately however, you can protect yourself against these fluctuations for when you buy a Marbella property, by setting up what’s called a “forward contract”.
This lets you lock in the exchange rate where it’s at now, so that if the pound weakens as the UK negotiates Brexit, you get today’s stronger rate. The advantage of which brings you peace of mind.
- The pound could rebound in the near future, if the UK negotiates a favourable Brexit.
Although sterling is on the back foot today, it could come roaring back before long should the UK negotiate advantageous terms with the rest of the EU, post-Brexit. This could happen because the UK is the 2nd biggest economy in Europe meaning it is highly unlikely that our neighbours will choose to cut ties altogether, for example we are responsible for 20% of German car sales alone.
French presidential candidate Alain Juppé recently made the comment that “everything will be on the table” during the Brexit negotiations, thus suggesting the UK could retain access to the Single Market whilst limiting immigration. If the UK does triumph, sterling may rebound and as a result, Marbella property becomes cheaper to buy.
- Sterling could triumph over the euro, if Brexit reignites the Eurozone crisis.
It could become less expensive to buy a property in Marbella should the recent Brexit spark another Eurozone crisis which will weaken the euro. Indeed, this is a possibility having analysed the week following the referendum results where the German, Spanish and French stock markets all crashed just as much, if not further, than the UK’s FTSE 100.
Moreover, following the UK’s vote to leave, “Eurozone investor confidence has declined to its weakest since November 2014” says Sentix. There are thoughts that Great Britain’s exit from the Euopean Union could ultimately turn out to be worse for Europe than the UK.
Taking everything into consideration, you are in a fantastic position to navigate the changes in the exchange rate post-Brexit and indeed get the best price at the time of purchasing a property in Marbella.
Stand Inmobiliario is a family run real estate agency that has been established on the Costa del Sol since the year 1979. Their team of professionals hold a wealth of knowledge and experience in not only the process of buying and selling property but about Marbella and all surrounding areas. Contact an expert today and start your journey to finding your dream home.
By Peter Lavelle at foreign exchange broker Pure FX http://www.purefx.co.uk