As the Bank of England drop interest rates to stimulate the economy, it devalues the pound against other currencies. The European Central Bank (ECB) has also recently dropped its interest rates but has decided not to make any future decision on further drops and seem to be playing hard ball and delaying any decision on cuts for as long as possible, making the Euro stronger against the Pound. It is very hard to say what will happen in 2009, but experts predict the Pound to slide further early in 2009 and possibly recover slightly in the second half of the year. One thing is for sure. We have certainly seen the last of 1.25 – 1.35 rates for a very long time.

The wonderfully fickle UK press would have us believe that the Spanish property market is shot to pieces. Well, it hasn’t faired too well that’s for sure along with pretty much everywhere else in the world. But has it been as bad as reported? Those few who did take the plunge to buy Spanish property in 2007 – 2008 or even before would have done very nicely thank you very much if they bought in Pounds Sterling.

Why? Well, if you had bought a property in Spain worth €200,000 you would have got an exchange rate of 1.35 meaning it actually cost you £148,148 at that time. Now that you have an asset in Euro still worth €200,000 (given all market conditions being equal) should you wish to sell, your property would now be worth £178,571 at €1.12 to the Pound for the same property. An increase of £30,423. This, of course, is a simple example and we haven’t taken into account other forces here but it does go to show the benefits of having an asset in Euro at this moment in time with a weakening pound.

As we have links with all major overseas markets including Dubai, Bulgaria, Turkey, Brazil to name but a few, it certainly seems that Spanish property is coming back into vogue again. Even big investors who you would have thought would be miles away from the Costa del Sol are coming back in relatively good numbers and snapping up bargain property that will only be on offer in a small window of opportunity in 2009. There are exceptional opportunities to buy property from builders who are desperate to sell their last, completed properties to fend off the banks. Builders are also lowering their prices to offset the exchange rate drop so in some cases, prices are the same as the start of the year in relative terms.You just need to know where to look.

We will also be re-assessing the value of all our vendors ‘second hand’ properties to make our selection of properties even more competitive for all of you from January 09.

Well, we are no currency market experts so we can’t advise on what will happen there. What you do need to think about though is whether you would kick yourself if the exchange rate did drop as far as ‘one-for-one’ (One pound to one Euro) and you were priced out of the market?

Investors are returning and buying in bulk which is normally the first signs of a recovery, so it may be a good time if you have the cash to do it. Flexible, cheap credit is not easy to get hold of in Spain either at the moment, so you do have to be realistic. All I can say is, if you can afford it and you want to escape the UK and Ireland and / or want a solid long term investment vehicle in one of the most beautiful and easily accessible locations in Europe, then you could do far worse than Southern Spain. Again, you need to know where to look and also remember to be selective about what and where you are buying. Any old property simply won’t do and the old adage of ‘location, location, location’ will always stand the test of time.