The unprecedented price drops in property in a number of countries, noticeably Spain, Portugal and the US, have attracted buyers who could not afford to buy abroad before the downturn, or simply were put off by the prices. In addition, as other forms of investment have become less attractive in terms of return on investment and risk, people have considered investing in something that not only offers a potential long-term capital gain but which they can also get pleasure from.
Quite apart from value, the other factor that drives a decision to purchase property abroad is quality of life, with good weather and cost of living also ranking high on the list. Here parts of the USA fit the bill remarkably well and a new statistical report confirms the USA as recording the highest level of growth in terms of enquiries made to The Overseas Guides Company during 2011. The most popular states looked at by potential buyers include Florida, California, Texas, New York and New Jersey.
Add to this the fact that 30-year fixed-rate mortgages are currently being offered at an all-time low rate of around three percent in the USA, and it becomes hard to resist it as a property investment destination. When you consider that a house that cost $200,000 five years ago in America can now be bought for $150,000 or in some cases even less, it’s not hard to see why.
Pursuing the sun, many investors and purchasers from abroad are vying with Spaniards to buy good quality property in the most sought-after areas of sunny Spain, which generally means close to the sea. However, according to industry sources, Murcia was one of the most searched for locations for Spanish property in August 2011 with La Manga, Cartagena and Mar Menor being the areas with the most interest. Upmarket golf resorts throughout the country, many being in Murcia, are also proving popular as they have the added advantage of built-in security and come with excellent facilities such as swimming pools, tennis courts and restaurants.
Last year the outgoing Spanish government halved IVA (VAT) on the purchase of new homes to just four percent – this is a significant saving on any property purchase. However, although prices having fallen, sometimes quite dramatically, and Spain’s new government is continuing the reduction for now, many realise that this may be short-term reprieve and the time to buy may well be now.
And then France beckons from across the Channel. Property prices have been fairly stable over the last year but some French banks are forecasting a fall of up to five percent for 2012, which may well encourage interest. There is a widely held view that asking prices in France have been over-inflated for several years and many agents are urging sellers to be more realistic in terms of property valuation. This means that there are likely to be some first-class bargains in many parts of the country. This, coupled with the fact that President Sarkozy has dropped his proposed property tax on second home-owners, means buying in France continues to be an attractive proposition.
The FNAIM, the largest body representing estate agents in France, reports a mixed bag of prices over the last year with some areas such as Brittany having a distinct fall in prices and others such as the Languedoc Roussillon and Champagne showing an increase. Areas currently offering great value for money include Alsace Lorraine, Burgundy, the Auvergne and the Limousin. For those wanting to be sure of maximum sunshine, the Languedoc Roussillon offers a great deal in terms of lifestyle with a Mediterranean climate, proximity to the sea and Spain, and much lower property prices than its neighbouring Provence.
For British home-owners moving abroad on a permanent basis there is the added incentive of the extra buying power that equity from a house sale in the UK would offer them abroad, where often like-for-like house prices remain cheaper than the UK.
Overall, 2012 is the year to watch. Reasonably priced property worldwide may mean that this is the year to buy and then to watch your investment soar as confidence returns to the property market.
Richard Way is editor of The Overseas Guides Company , Telephone: 0207 898 0549
www.overseasguidescompany.com
