Ok this might just sound like a desperate call to UK (Sterling denominated) buyers out there, but might it just be a good idea to pop on a plane and buy a Property in Mallorca before Christmas (a nice present for someone!!)?

Brexit certainly took the shine off what seemed to be a good time to buy a property in Mallorca for British buyers. At the beginning of the year Sterling stood at circa 1.36€ and even though it steadily declined in the weeks ahead it found a level at around 1.30€ before that never to be forgotten Referendum day!! Almost over night British buyers lost as much as 15% of their spending power along with a load of confidence about where things were going economically!

At the same time the Mallorca residential real estate market simply got on with what it was doing, powering ahead supported by a pretty sound set of fundamentals (see Mallorca Residential Real Estate Market update – November 2016). Result? Some (but certainly not all) UK buyers jumped on to the side line and either cancelled or postponed their buying decision just when it seemed to be the best time to jump on the Mallorca property market train and “gain” from the forecasted market growth for 2017 and 2018.

Without wanting to put my neck to far out on the block (!!), is there a window about to open thanks to a rebound in Sterling in the weeks ahead? With the Government seemingly not getting it’s way re cutting out Parliament of the whole sensitive issue of the Brexit negotiations; stronger than expected economic growth, rising inflation in the pipeline and much more dovish statements coming out of the Bank of England, reference interest rates and the value of Sterling, I just wonder whether those analysts punting on the Sterling – Euro exchange rate returning to 1.25 or even 1.30 by the end of the year may just be on to something!

If that were the case, and you popped over before the end of the month, had a good look around, found the right property, negotiated hard (November – December is always a good time as owners see the Spring, and future rental income streams etc  suddenly quite a long way away !!) and hey presto just when it is time to make the down payment, Sterling has ticked back up almost to where it was and Brexit becomes just a bad dream!!

Assuming I were right, and on top the current growth in the market of circa 5 – 8% per annum continued throughout 2017 and 2018, then you would be sitting on a very nice gain from where you are today!!

In simple terms Sterling would give you between 10% and 15% more spending power,  depending on the exact start and end exchange rates we use. If we then factor in circa 6% growth per annum ie 12.3% compounded over the next two years, your say 750,000€ property has just delivered you a “benefit” of 170-180,000€  or circa 25%!

I know this is all about forecasts and there are no guarantees, but at least it is food for thought for bonfire night!!!!!!!!!!!

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