By Paul Shinerock
Property prices are never shaped by just one factor, but interest rates are often the headline act. With the UK’s base rate recently reduced to 4%, and the European Central Bank holding its rate at 2.25%, the comparison with Europe has sparked plenty of conversations.
As an estate agent in Purley, Croydon and Greater London with decades of experience - and as someone who also owns property in Spain - I’ve seen first-hand how markets respond to economic shifts so I wanted to take a closer look at how Southern England compares to Southern Spain, what’s driving the differences, and what that might mean for anyone buying or selling property in Purley, Croydon, or the surrounding areas.
The UK’s higher interest rates make borrowing more expensive, which limits how much buyers can afford to spend. That, in turn, keeps demand and property prices in check. In many parts of Europe, lower rates make mortgages more affordable, allowing buyers to stretch further, and this is one reason why prices in some regions have grown far more quickly than here over the past 15 years.
Spain is a useful case study. Speaking as someone who owns property there, I know how varied the market is! Just like Greater London, no two areas are quite the same. Coastal hotspots can move at a completely different pace compared to inland towns. Still, if you compare Southern England with Southern (coastal) Spain since the late 2000s, the contrast is clear: Spanish property prices have more than doubled. Here in Purley, Croydon, and much of Greater London, growth has been much slower.
At first glance, the difference could be pinned on interest rates alone, making borrowing cheaper and possibly pushing prices higher. But that’s only part of the story. In 2008, Spain’s property market took a severe hit, with prices in some regions falling by 40 - 50%. The UK experienced a downturn too, but less extreme. So, while Spain’s recent growth in the past two years is impressive, it comes from a much lower starting point. When you adjust for inflation, many Spanish regions still haven’t returned to their pre-crash peaks of 2007.
To add another layer of context, consider prime California, where property prices are higher than both Southern Spain and Southern England despite the US having higher base rates than the UK. This underlines how many different factors can influence a housing market: interest rates, political stability, local economies and demand from overseas buyers.
Here in Purley and Croydon, the market has adapted to higher interest rates. Buyers are more measured in their decisions, but well-presented, well-located homes are still attracting strong interest - especially when priced sensibly.
Transport remains a big selling point. From Purley, you’ve got quick trains into London Bridge and Victoria, while Croydon’s tram network and proximity to Gatwick keep it high on many buyers’ lists. As an experienced estate agent, I’ve seen how these practical benefits continue to support property values even when the wider market slows.
Families are still drawn to property in Purley for the schools, green space, and strong community feel. Demand is more price-sensitive than it was during the era of low interest rates, but it’s still there.
It’s tempting to draw a straight line between the UK and Spanish markets, but the reality is more complicated. Spain’s southern coast relies heavily on overseas buyers, second-home ownership, and tourism - all of which can magnify price swings. Southern England’s demand is primarily driven by people living and working here all year-round. Spain’s market is influenced by the euro’s strength, travel patterns, and changes in foreign investment. Here in Greater London, while external factors matter, most market movements come from local employment, lifestyle shifts, and school choices.
Over the next 15 years, whether Southern England closes the price-growth gap with Spain will depend on:
Interest rates: A sustained period of lower rates could boost affordability
Housing supply: Availability of quality homes in Purley, Croydon, and beyond will shape prices
Economic confidence: Stable employment and growth encourage buying
Population changes: Shifts in domestic and international migration affect demand.
For now, the market is steady rather than booming. Realistic pricing is still delivering results for sellers, while buyers continue to find value in homes that tick the location and presentation boxes.
Spain’s growth is eye-catching, but it’s built on a recovery from a steep fall. Southern England’s more measured gains reflect the fact that we didn’t see the same crash.
For anyone considering selling property in Purley or searching for property for sale in Croydon, it’s the local factors - demand, presentation, and pricing - that will make the difference.
If you’d like a clear, no-nonsense view of your property’s value and how current market trends might affect your sale, get in touch.
Or generate a full report on your own property, including an instant estimated valuation.
Call us on 020 8660 2010 or email enquiries@shinerocks.co.uk to arrange a conversation. Whether you’re buying or selling, our local knowledge of Purley, Croydon, and Greater London will help you make your next move with confidence.
Use the form to send us your questions and we'll respond as quickly as possible.
You can also call us on 020 8660 2010, or email enquiries@shinerocks.co.uk.
Learn more about the areas we cover by reading these helpful location guides.
