Question:
In the UK house prices have been static recently yet prices in Tenerife seem to continue to show steady growth? Why is that?

Answer:
This is because the markets here and in the UK function in different ways. The UK’s housing market has recently been static because of the UK government’s insistence on using interest rates to control inflation. So when inflation edges up, the Bank of England’s monetary policy committee puts up interest rates. This reduces spending, which has a downward effect on prices, however a side effect of this is to increase mortgage payments, and this causes mortgage repayments to become too expensive, in particular for first time buyers. Well, you don’t need a degree in rocket science to figure out that when first time buyers, the foundation of the whole market in the UK, are unable to buy, that this destabilises the whole market and prices become static, or, in extreme circumstances go down.

In contrast, in Tenerife, in the areas where most readers of this column would want to buy, the market is driven by mostly British, mostly middle-aged people, who are more likely to benefit than suffer from increases in interest rates. Yes folks, the grey vote has it! Of course the increasing confidence, and the greater aspirations of the British people, to live in, or have extended holidays in, the fantastic climate of the Canary Islands cannot be understated. There are huge benefits in living here, reduced living costs, longer days and increased opportunities which mean that Tenerife is moving from being a low cost package holiday destination, to a high amenity, 5 star resort where many of the non-Canarian people here are residents rather than just holidaymakers. So buy in Tenerife with confidence, there are no meteoric increases but no periods of stagnant prices, just steady, sustainable growth, in one of the best places to live on earth.