Cost of Living in Spain Series: Watching The Currency Market When Buying And Selling Spanish Property

House in Spain

When I got to point #2 in a recent article entitled 10 Ways To Save Money When Buying Your Spanish Property, it had me casting my mind back almost nine years to when we were about to buy our first property abroad, here in Andalucía.

We had sold our house back in the UK in record time, and were renting a town-house in the pretty, mountain village of Frigiliana.

Having never rented a property before, it seemed sensible to see if we liked the area as a place to put down roots, as well as to experience the full range of the seasons of the year, before we actually bought somewhere. After all, the weather may have been hotter in summer or cooler in winter than we had imagined – and indeed, it was!

We made many house-hunting trips to various towns and villages, both inland and along the coast towards Málaga, and eventually as far along the western Costa del Sol as Estepona. For various reasons, but mainly because of fewer high-rise buildings and built-up areas, we decided that the Axarquía region, to the east of Málaga, was the place for us.

We knew we would be transferring a sizeable chunk of the proceeds of our UK house sale via a currency firm (into Euros) to pay for our new house, so we took the opportunity to keep an eye on the fluctuating currency market.

As a result, we were able to jump in right at the top, to bag a cool €1.50 euros for each £1 sterling.  This gave us almost ten thousand euros more than we had originally been expecting, which was enough to put a brand new kitchen with matching appliances into our new property. Quite a bonus!

And yes, I do know that the market could have gone the other way, but on this occasion, it didn’t.

Blue door in Frigiliana, Spain

Over the next few years, the British Pound made a steady decline against the Euro until it almost hit parity (when £1 only bought €1.08, at its lowest rate).  This meant that for many British expats living in Spain and relying on an income, savings or a pension from the UK, their income in real terms had reduced by almost one third.

Then, of course, came La Crisis, as it is known in Spain, when the difficult economic situation has meant that some British expats who may not have carefully planned for their future (as well as some who did) have been left in the unfortunate position of having to sell up and return to the UK.

Things have improved a little over the last few years, with the current exchange rate against the British Pound being €1.26 as of today’s date (15th July 2014).  But there are still anguished mutterings amongst British expat house sellers that they are having to accept lower prices than they paid for their properties, several years ago.

I want to look at this in more detail, using reverse psychology to see if the situation is really as bad as they think.

Key in house door

Back when I bought my house in January 2006, with the exchange rate at £1 buying €1.50, a €300,000 euro house in Spain actually cost £200,000.  To keep the figures simple, let’s assume that almost nine years later the price of that house has not risen at all and is sold today for €300,000.  Converted back into British Pounds (again keeping it simple, so let’s use €1.25 for each £1) then the initial £200,000 investment now converts from the €300,000 sale price, to £240,000 - an increase of 20%, due entirely to currency fluctuations.

Even if that self-same house were sold for only €280,000 (€20,000 less than was paid for it) the conversion into British Pounds would be £224,000 – which is still an increase of 12% over the £200,000 that was initially paid for the property.

So maybe the situation is not quite as bad as some people imagine.

Rooftops of Frigiliana, Spain

Of course, my example above is a simple one and does not take into account any of the following:

  1.  Capital gains (or any other) tax which might become due once the house is sold.
  2.  Where under-declarations were made at the time of purchase (when everyone in Spain was expected to pay for part of the price of the house in cash,  and furtively sneak  €80,000 to the vendor in a plastic, Mercadona shopping bag).
  3.   Legal and/or estate agents fees.

Whilst the above example is only applicable if someone is selling up in Spain and moving back (or at least sending their money back) to the UK,  if you are selling and want to re-purchase in Spain, because of the current housing market, you are now in a powerful position to negotiate prices when buying your next property.

Stairway to Heaven

To illustrate my point, I have only used simple, rounded figures, and it’s always wise to take legal and financial advice when making substantial property purchases.  

The purpose of this post is to indicate the advantage of never under-estimating the fluctuation of the currency market, which is a point often missed, or at least not discussed, as it should be.

This post is not meant to offer legal advice, merely an observation.

 

 

Cost of Living in Spain: February 2014

Cost of Living in Spain

Every day, around one hundred people find themselves visiting my blog after typing the search term “Cost of Living in Spain” into Google.  It’s a popular subject, and for that reason at least a couple of times a year, I publish a list of the current prices of a number of items here in southern Spain.

It’s worth bearing in mind that the following information is relevant to the kind of lifestyle and area where I live, east of Málaga.  We choose to live like locals, eating fresh, seasonal produce and frequenting bars full of Spaniards rather than tourists.  Similarly, if your choice would be to only buy internationally branded foods and eat in tourist areas then you will find costs are considerably higher.

So …. whether you are fed up of the wet weather in the UK, have been dreaming of living in southern Europe for many years or you’re just curious – here’s my updated list of standard grocery items for your perusal.

For the sake of comparison,  I have once again used the largest Spanish supermarket – Mercadona.

Mercadona supermarket, Spain

STANDARD GROCERY LIST

This is the up-to-date Standard Grocery List I have published previously.  The first price shown is as it was in August 2013, with this month’s prices in RED alongside.


Milk (semi–skimmed UHT, own brand), 1 litre   0.59 €      0.60 €

Loaf  (white, baguette 250g)   0.45 €      0.45 €

Loaf (white, Bimbo brand, 460g 100% natural)  1.49€    1.49 €

Butter (250g, own brand)   1.05 €        1.25 €

Sugar (1kg, white)   0.93 €    0.93 €

Coffee (ground, 250g, Santa Cristina)   1.89 €       1.89 €

Eggs (12, own brand caged, medium)  1.35 €      1.35  €

Olive oil (1 litre, extra virgin, own brand)  3.35€   (5 litres 15.50€)    3 €   (5 litres 14.50 €)  **

Rice  (1kg, long grain, own brand)   0.71€    0.71 €

Pasta  (1kg, own brand)   0.79€      0.75 €

Pasta  (500g, wholewheat)   0.99€      0.99 €

Tinned tuna  (6 x 80g, own brand)  3.39€      3.35 €

Chicken breasts (1kg, boneless, skinless, packaged))  5.80 €       5.80 €

Pork chops (1kg)  4.60€     4.75 €

Beef mince (Store brand, pre-packed, 700g)   3.80 €       3.80 € 

Fish  (1kg Salmon steaks)  10.75 €      10.75 €

Fish  (1kg Dorada, Gilt-head bream)  6.95€       6.95 €

Apples (1kg, green, Golden Delicious)  2.00 €       1.85 €  **

Oranges (1kg)  1.19 €     0.79 €   **

Bananas (1kg)  1.29 €     1.39 €

Potatoes (1kg)  1.25 €     0.89 €    **

Lettuce (1 head, Iceberg)  0.85 €      0.87 €

Red Peppers (1kg, loose)  1.95 €    1.89 €

Green pointed “Italian” Peppers (1kg, loose)  1.35 €      1.99 €   **

Tomatoes  (1kg, loose)   0.99 €       1.29 €   **

Coca-Cola (1.5 litre bottle)  1.09 €     1.09 € 

Water (2 litre bottle)  0.42 €       0.42 € 

Domestic Beer (1 litre bottle, Cruzcampo)  1.25 €       1.25 €

Imported beer (6 x 25cl bottles Heineken)  3.05€       3.65 €

Bottle wine (medium priced)  3.00 – 3.50€      3.00 – 3.50 €

Colgate toothpaste (100 ml)   1.75€       1.75 €

Pantene shampoo  (300 ml)   3.00€       3.00€

Toilet rolls (pack of 6, own brand)   1.95 €      1.98 €

Washing powder (Box, 35 washes, Elena brand)   4.87 €       4.87 €

** Seasonal changes

For the costs of accommodation, utilities, motoring, public transport and entertainment – prices are largely unchanged since last time.  Please see HERE.

Village houses in Cómpeta, Axarquía, Spain

Many people dream of moving to southern Spain with the promise of better weather coupled with a healthier, outdoor Mediterranean lifestyle.  There are many other considerations to bear in mind when trying to compare living costs, and the following may be some of them:

  1. Unemployment in Spain is currently running at record levels with 25% of the adult population out of work.  If you are considering moving to Spain, you would need to be confident that your finances are secure or you might end up having to return to your home country after failing to find employment.
  2. Tied in with the issue of employment, comes health cover.   Unless you are employed, self-employed or retired, (thus qualifying for cover under the Spanish health system), you will be required to take out private health cover.
  3. The cost of living is really only half of the equation.  Salaries and wages may be very different in Spain from what you are used to elsewhere.  What is important is what is left each month after you have paid for your essentials.
  4. Fluctuation in currency exchange rates can make a huge difference to you if your source of income comes from outside of Spain.  For example, when we first came to live in Spain ONE BRITISH POUND bought us ONE EURO AND FIFTY CENTIMOS.  Very handy when we were purchasing our house.  However, a couple of years ago, and completely outside of our control,  we only received just ONE EURO AND EIGHT CENTIMOS for each BRITISH POUND – a staggering drop in income of almost one third.
  5. Spanish houses in this area are built to keep out the sun in summer rather than to retain heat in winter.  With tiled floors, small windows and inadequate heating systems, houses can be surprisingly chilly during the winter months, making them expensive to heat.
  6. Whilst some costs are much more favourable in Spain (for example our cost of IBI is about one quarter of the cost of a similar property in the UK for Council Tax), other costs are significantly more (i.e. when purchasing a property, costs amount to approx 11% of the purchase price).
  7. You might have to factor in the cost of flights back home to the UK (or your home country) to visit friends and relatives.  Often these can be bought through budget airlines for reasonable prices - but what if you need to return quickly for a family emergency?
  8. Then there is the question of taxes – not only of the personal variety, but also related to any property purchase.  There are many factors at play, depending on personal circumstances, and whilst I often receive messages from visitors to my blog regarding such matters, I am not a tax expert and would always recommend you seeking professional advice given your own personal financial situation.

MY ADVICE:  There are many more things to bear in mind when considering the cost of living in Spain, than the price of bread and milk.  DO YOUR RESEARCH FIRST!

How does the cost of living compare where you live?  Have you ever considered moving abroad?

 

You might also enjoy reading this article:

Cost of Living in Spain Series: Watching The Currency Market When Buying And Selling Spanish Property

 

Cost of Living in Spain: August 2013

Edited to add: When you’ve read this article, make sure you also look at my up-to-date Cost of Living in Spain Report: February 2014, now available HERE.

Shopping trolley in Mercadona supermarket, SpainMany people find themselves reading my blog because they have searched for the term “Cost of living in Spain“.  In August 2012, I posted my first article about the cost of living here in the Axarquía region, east of Málaga, and have continued to write updates every four months throughout the past year.  They have proved to be some of my most popular posts.

Of course, all the information is relative.  What is right for one person will be totally different for another.

We have found that living like locals – eating seasonal fruits and vegetables, buying Spanish brands and eating out in bars and restaurants full of Spaniards, has enhanced our experience of moving abroad.

If you move to Spain and your choice is to buy only international branded food and drink, or dine out at tourist restaurants, then your cost of living will be considerably more expensive than mine.

Bear in mind that the costs I will publish are relevant to me, living here on the eastern Costa del Sol.  Prices in other areas of Spain may be different.

Competa village, Spain

ACCOMMODATION: Buy or rent?

We moved to Spain eight years ago, and for the first twelve months rented a townhouse in the village of Frigiliana.  We wanted to experience a full year, during every season, before we committed to purchasing our current home.  I would recommend that course of action to anyone considering moving abroad.

Most people know about the financial crisis affecting Spain at the moment, so I wont go into the price of houses or apartments.  Search Google for estate agents in Spain if you´re interested, and you´ll find out far more information than I can give you here.  If you do decide to purchase, you will most likely need a sizeable deposit and may find difficulty obtaining a mortgage, should you need one.

Bear in mind also the fluctuating currency exchange rate between your home currency and the Euro if you need to transfer large amounts of money into Spain.  Fortunately for us, when we bought our house, the exchange rate was  €1.51 for each British pound sterling (£1).  Today’s rate would only give  €1.16 for each British pound – a considerable difference.

You can find a lovely apartment to rent, with 2-3 bedrooms, 1-2 bathrooms and a communal pool, on the coast but away from the main tourist area, for €450- €500 per month (on an 11 month contract).  In more rural areas it would cost less, or in urban/touristy areas the prices would be higher.

It’s easy to find a detached villa with a private pool and a large garden for €1000 a month (and often less).

So, when you compare the price of some rented accommodation, in a not very nice area of many cities in the UK (for example), you can see the attraction for people wanting a cheaper option, living in Spain.

MY TOP TIPS:  It´s only when you are actually here in Spain that you can discover the full selection of rental options that are available.  Almost everyone you meet knows someone who has an apartment to rent, and many of these will never find their way onto any English language website.  If you´re serious about renting a place in Spain, get yourself over here and start asking around.

You could also try haggling over the cost of the rent – the worst they can say is ¨No”!

Cepsa butane gas bottle

UTILITIES

Like many places in the world, the cost of household utility bills has risen considerably over the past few years.

Electricity:  For a 3 bedroom/2 bathroom detached house in the countryside with a swimming pool, we pay around €100 per month.   The cost of consumption for us in winter is for heating and lighting, whereas in summer it’s for lighting and the swimming pool pump running for 8 hours a day.  Added to that, we also have air conditioning units in the living room and master bedroom, though we use them sparingly – preferring to open windows during early morning and late evening.  Sometimes though, especially in July and August, you just have to put the air-con on!

Gas:  We are not connected to a piped gas supply here, so we use bottles of butane gas.  This is a common feature throughout many areas in this part of Spain. A year ago, a 12.5kg bottle of Butane gas cost  €16.45.  They are now  €17.50.   For us, one bottle lasts (on average) three to four weeks for two people,  although this could be longer in summer, (depending on how many visitors we have), for all hot water, showers and cooking on a gas hob. Last September we had a new, much more efficient gas water heater fitted and, even though it has a larger capacity for water heating than the previous one, it uses significantly less gas.

Water: We are not connected to mains water because we live in the countryside, so when we bought our house part of the purchase cost was for a share in a local water company.  We have a 14,000 litre water deposit in which to store our house water.  Our water share gives us an allowance of up to 17,500 litres of water each week at reduced cost, though if we use more than this, the price rises steeply.  Needless to say, we don´t use this amount of water, even allowing for swimming pool top-ups and garden irrigation in the summer months.  Our water company, Patamalara, send out their bills every two months, and some of the cost appears to depend on the amount of repairs that have been undertaken on the system.   Over the past twelve months our annual water bill has amounted to  €97.

IBI or Council Tax: Paid yearly to the local council.  This year’s bill is  €337 – the same as it has been for the past five years.  Bear in mind, we don’t have a rubbish collection here as we live in the countryside, so we have to take all our household waste to one of the collection centres in a local village – but this is no problem as we take it when we are on our way somewhere.  When we lived in the UK, we used to pay four times this amount – over eight years ago!

Telephone:  Living in a mountainous area of the countryside, Telefónica (the largest fixed phone and ADSL operator in Spain) are unable to supply us with land-line telecommunications.  We therefore rely on Skype (via the internet) for most calls (which are free to other Skype users, or by using credit, if not) and have a pay-as-you-go mobile phone with Movistar (also owned by Telefonica).

Internet:  We use a wireless internet option costing €29 (inclusive of IVA tax) per month, with unlimited downloads (within reason).  Speeds up to 3 Mbps.

House and Contents Insurance: Based on the re-building costs of the house, including contents, we pay €227 per annum with Linea Directa.

Peugot 308 saloon

MOTORING COSTS

The cost of motoring in Spain has risen considerably over the past few years.

The price of Diesel (gasoil) at the Repsol garage at Torrox Costa is  €1.42 per litre.

Unleaded petrol (gasolina sin plomo) 95 Octane is  €1.52 per litre.

As in most countries, branded petrol stations such as Repsol are often more expensive for petrol and diesel compared to supermarkets and hypermarkets such as Carrefour.

New cars are expensive in Spain, and even though advertising billboards might seem to offer competitive prices (for example using Plan PIVE – a government help scheme offered when trading in a ten-year-old car for a brand new one), the reality is that many special deals are often only available when taking out expensive finance agreements. We found this out for ourselves this summer when we changed our 9 year-old Peugot 307 for a six-month-old Peugot 308.

Cash is NOT king around these parts, it seems.

Second-hand vehicles (often with high mileage) hold their values well in Spain, making a comparable model of the same age in the UK (for example) much cheaper.

Car tax (Impuesto vehiculos traccion mechanica) is based on fiscal horsepower (which bears no resemblance to the mechanical horsepower of the vehicle) and is a means by which the taxation is calculated.  For our Peugot 308 the cost is €51 per annum.

Our car insurance for an almost new Peugot 308 1.6 E-HDI (with Linea Directa – the Spanish equivalent of Direct Line in the UK), for fully comprehensive cover with legal assistance included, and an excess of €150 costs €570 per year.

There are some toll roads on the western Costa del Sol, but fortunately none in the Axarquía, east of Málaga.

ALSA bus, east of Malaga

PUBLIC TRANSPORT

Spain’s public transport system is relatively cheap and reliable.

Trains: Because of the mountainous terrain there are no trains running through La Axarquía, though you can catch a train from Málaga to many other Spanish cities, including Granada, Seville, Córdoba, and MadridI can certainly recommend the AVE train (Spain´s equivalent of the Bullet Train) as an alternative to budget flights, with favourable prices being found in advance, online, via state-owned train operator, RENFE.

Buses:  The main bus operator here is Alsina Graells (ALSA for short).  Their website is in English, and from here you can study bus schedules and purchase tickets in advance of your trip.  There are generally plenty of buses between towns and cities, and they usually leave on time.  Buses may be infrequent to remote villages in the Axarquía, with often only one bus per day or none at all at the weekend.  The cost of a bus ticket with ALSA,  from Nerja to Málaga, (approx. 60 kms) one way is  4.43 € or €8.02 for a return trip.

Glass of wine near the Alhambra, Granada

ENTERTAINMENT

Eating out:   Menu del Día (menu of the day, usually at lunch time) 3 course meal, including bread and one glass of beer, wine or a bottle of water) 8 – 10 €

Evening dinner for 2: (three courses) at a mid-priced restaurant, including a glass of wine  40 €

Tapassmall beer or glass of wine including a tapa 1-2 € (depending on whether it’s a tourist area or not).

Cinema ticket  (International release, Yelmo cinema, Malaga)   8.60 €

Round of GOLF  (2 players + buggy, Baviera Golf course at La Caleta de Vélez)  97 €

Cigarettes (pack of 20, Marlboro)  4.75 €

Food shopping

STANDARD GROCERY LIST

This is the Standard Grocery List I have published previously.  The first price shown is as it was in August 2012, with this month’s prices in RED alongside.  If there is only one price indicated, this is a new introduction to the list.  For the sake of comparison,  I used the Spanish Supermarket – Mercadona.

Milk (semi–skimmed UHT, own brand), 1 litre  0.54 €      0.59 €

Loaf  (white, baguette 250g)   0.45 €    0.45 €

Loaf (white, Bimbo brand, 460g 100% natural)   1.49 €

Butter (250g, own brand) 0.98 €     1.05 €

Sugar (1kg, white) 0.95 €    0.93 €

Coffee (ground, 250g, Santa Cristina)  1.79 €      1.89 €

Eggs (12, own brand caged, medium) 1.35 €    1.35  €

Olive oil (1 litre, extra virgin, own brand) 2.75 €   (5 litres 12.99€)    3.35 €   (5 litres 15.50 €)

Rice  (1kg, long grain, own brand)   0.71 €

Pasta  (1kg, own brand)  0.79 €

Pasta  (500g, wholewheat)  0.99 €

Tinned tuna  (6 x 80g, own brand)  3.39 €

Chicken breasts (1kg, boneless, skinless, packaged))  5.50 €     5.80 €

Pork chops (1kg)   4.60 €

Beef mince (Store brand, pre-packed, 1kg)  5.43 €    3.80 € (for 700g)

Fish  (1kg Salmon steaks) 8.75 €    13.50 €

Fish  (1kg Dorada, Gilt-head bream)   6.95 €

Apples (1kg, green, Golden Delicious) 1.35 €     2.00 €

Oranges (1kg) 1.39 €     1.19 €

Bananas (1kg) 1.25 €     1.29 €

Potatoes (1kg) 0.92 €     1.25 €

Lettuce (1 head, Iceberg) 0.85 €      0.85 €

Red Peppers (1kg, loose)  2.29 €   1.95 €

Green pointed “Italian” Peppers (1kg, loose)  1.99 €    1.35 €

Tomatoes  (1kg, loose)  1.19 €     0.99 €

Coca-Cola (1.5 litre bottle) 1.09 €    1.09 €

Water (1.5 litre bottle) 0.45 €      0.42 € (for a 2 litre bottle)

Domestic Beer (1 litre bottle, Cruzcampo) 1.29 €    1.25 €

Imported beer (6 x 25cl bottles Heineken)   3.05 €

Bottle wine (medium priced)   3.00 € to 3.50 €

Colgate toothpaste (100 ml)  1.75 €

Pantene shampoo  (300 ml)   3.00 €

Toilet rolls (pack of 6, own brand) 1.95 €    1.95 €

Washing powder (Box, 35 washes, Elena brand) 5.94 €    4.87 €

Currency Conversion from XE €1 = 1.34   USD
0.85     GBP
1.48     AUD
1.40     CAD
1.70     NZD
13.70   ZAR

So, tell me – HOW DO PRICES COMPARE WHERE YOU LIVE?

Whilst you’re here, you might be interested in these articles:

Cost of Living in Spain Series: Watching The Currency Market When Buying And Selling Spanish Property

AVE: Taking the Fast Track from Málaga to Madrid

 

Seriously: Would you buy these products?

I often have a little chuckle to myself when I am shopping in a Spanish supermarket.

Seriously, would YOU buy some of these products?

Nelly hairspray

Nelly hairspray

Bonka coffee Bonka coffee

Bimbo bread

Bimbo bread

Colon detergent

Now, call me fussy, but I can’t bring myself to wash my clothes in Colon Vanish washing detergent!

Flota washing powder

or (possibly) even worse, Flota Spa washing powder!

Somat diswasher tablets

But, being a northern lass (originally from Lancashire in England), I always find some consolation knowing that at least I can always find Somat f’ert dishwasher!  LOL

 

Have you spotted any products in other countries that sound strange or amusing in your own language?  You will let me know, won’t you?  LET’S HAVE SOME FUN!

Other posts you might enjoy:

Roadside Advertising: Not just a Load of Bull

Travel Theme: Signs

Classic Andalucía: La Alhambra, Granada

IKEA: It´s Swedish for self-assembly furniture

If the truth be known, IKEA is an acronym comprising of the initials and location of the founder of IKEA - Ingvar Kamprad, Elmtaryd (the farm where he grew up) and Agunnaryd (his hometown in southern Sweden).

The company is the world’s largest furniture retailer, with stores in many countries, including Spain.

Car park solar panels at Ikea, Malaga

I wanted to pop along to IKEA to pick up some photo frames for a forthcoming Art and Photography Exhibition in Torre del Mar, where I will be displaying some of my photos in June.  I haven’t visited my nearest store in Málaga for almost a year, but since my last visit some rather excellent solar panels have been erected as sunshades for cars parked on the 1400-space free car park.  What a innovative idea!

IKEA has invested €4.6 million installing solar panels not only on the car-park sunshades, but also on the roof of the Málaga store, which will produce 2,821 MWh per year – 64 per cent of the amount of energy the store used in 2012.

solar panel

Opening hours at Ikea, Malaga

Did you know that the IKEA logo is blue and yellow to reflect the colours of the Swedish flag?  Well you do now!

welcome to Ikea

So, if you’ve recently moved to the Málaga area, and are looking for somewhere familiar to buy your stuff – this might be the place for you!

Ikea yellow bagsThe Málaga store has the usual frustrating one-way, anti-clockwise layout, typical of every IKEA I´ve ever been in, whereby you have to walk around the whole store (and it´s a long way) to get to the exitunless you spot the craftily concealed short-cuts.

kitchen display

IKEA is situated in the Bahia Azul commercial area near Plaza Mayor.   If you know where Málaga airport is – well, it´s close by, just off the same road – MA-21  at Exit 2.

Opening hours:  Monday-Saturday 10am – 10pm  (The store is also open some Sundays and Public Holidays, but it’s best to check the website before you set off)

Address:  Av Velázquez, 389, 29004 Málaga, Spain

Phone:+34 902 40 09 22

Website: IKEA website for the Málaga store (in English)   

Do you have a degree in IKEA self-assembly furniture?  I know I don’t!

Whilst you’re here, why not have a look at:

Spanish football: Estadio La Roselada, home of Málaga CF

AVE: Taking the Fast Track from Málaga to Madrid

CBBH Photo Challenge: MULTI-COLOURED