Why buy property abroad? Property overseas and the market worldwide
The past few years have seen an unprecedented growth in the market for property overseas. Historically low interest rates have made it possible to borrow more money whilst investors have increasingly been turning towards property rather than the stock market. High domestic prices have resulted in more Brits choosing to buy property abroad. Property prices in most countries have so far avoided the disastrous crash feared by many.
Buying abroad? Property prices on the rise in most areas
Since 1997, the price of property overseas and at home has consistently risen by more and quicker than in any previous boom. The number of Brits who own property abroad is set to double to 4.4 million in the next few years with over 30% of UK residents reportedly looking to buy property abroad.
Spain remains the most popular destination amongst UK buyers although they are increasingly focusing on Southern European and new EU countries. The cost of property overseas has risen sharply in countries like Bulgaria, the Czech Republic, Cyprus, Hungary and Poland with annual price rises of at least 10 to 20%, and in some cases 20 to 40%.
UK buyers are not the only ones looking to buy abroad. Property prices rose by 12.5% in 2004 in the United States leading many American investors to look further afield.
Reasons why people are buying property overseas
People are drawn to areas such as Eastern Europe and North Africa because of the low costs of houses there. The interest caused by people buying property overseas leads to growth, rising prices and, as a result, more overseas buyers to a particular area.
Some countries have introduced measures to encourage people to buy property abroad. In Dubai, property is free of tax, whilst in France the leaseback scheme was instigated to guarantee buyers rental yields.
Investors looking for rental opportunities may focus on developments near golf and ski facilities and when buying abroad, property near up-and-coming tourist resorts are also attractive.
Those who are looking to emigrate may be looking to buy property overseas in areas such as Australia and Canada which are attractive due to the opportunities they offer.
Slowdown, not meltdown for property overseas
The market has cooled considerably in Britain. This also appears to be the case abroad in places where investors had been advised not to buy property abroad because of fears over bubbles bursting. Property commentators have been predicting an apocalyptic crash for years but it appears a soft landing may be taking place instead.
Australia has seen average prices rise by over 170% since 1998 but has seen a considerable slowing of late. Again, it appears prices are likely to be slowly brought down to earth. In Europe, many experts now rate the chances of a major crash as remote.
Buy property abroad where the prices are still rising
France, Spain and Ireland maintained average price hikes of over 10% in recent years, whilst Portugal and Italy has seen the average cost of a house rise between 5 and 8%. Interest rates in Europe remain low which should ensure a buoyant market for property overseas over the next few years.
More people in the UK are choosing to buy property abroad than ever before. The prospects for those buying overseas depends on where you plan on buying abroad. Property remains a good investment but it appears the phenomenal rise in the cost of property overseas has slowed to a more reasonable level.
