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Assetsure News 13th October 2007
Spanish Property
Prices Fall in Holiday Home Hotspots
The European property market is seeing falls in
holiday home property prices in popular hot spots like
Spain,
France and Bulgaria. Prices have fallen by an average of 10% in key coastal
hotspots (despite an overall stagnation of prices) and investors who bought in
the last year will suffer the most. The interest rate rises of recent years
linked to relative strength of the Euro have made mortgages more expensive for
local residents of holiday home hotspots. This increase in property borrowing
has been coupled with a massive over supply of
holiday home developments, has created a
perceived weak short term investment market. There are huge numbers of Brits
buying abroad with over £100 billion pounds worth of property made up from three
million
second homes or holiday homes (particularly in Spain and France).
The fall in the price of villas in Florida (due to the collapse of US property
bubble and huge hurricane destruction) destroyed off plan 'opportunities' for
Brits. Similarly, the promise of off-plan 'investment opportunities' in mainland
Europe seem very unappealing to British overseas property investors. After a
decade of speculative off plan holiday home purchase, experts believe the boom
is over... Michael Ball, professor of real estate at Reading University: "There
has been a boom. The market has been driven by foreign investors. Now that is
beginning to turn." Another indicator of problems are long term fall in rental
yields... the average rental yield has dropped in the last 6 months signalling a
clear message of concern for holiday home purchased for
short term holiday lets.
However, the British dream of escaping the UK high cost of living and rat race
for a more peaceful lifestyle continues... Spain still has a quieter the pace of
life, unspoilt countryside, space and good quality transport links in country
and to neighbouring countries in Europe. In addition, good healthcare and a
relatively modern economy matched with a stable political climate - the
horrendous British summer rainfall and floods only helped to fuel Brits desire
to seek sunshine overseas. A recent survey by Clydesdale Bank highlighted that
over 30% of Scottish people wanted to buy a holiday home in a sunnier country,
such as Costa Blanca and Costa del in Spain. Other factors for wanting a second
home abroad were retirement, quieter lifestyle and a smaller proportion for
investment only purposes.
With the introduction of low cost budget airlines and new airports opening in
Southern Spain in Murcia, even more affluent UK commuters are starting to work
and live in Spain and commute back to the UK when require. Key areas such as
Herradura, La Toja and Bayona form picturesque unspoilt Spanish towns for a
second home while being close enough to commuter airports like Malaga (just 45
minutes away).
Despite falls in previously high growth holiday hotspots, the average rise in
Spanish property in October 2007 is still on average, over 1% indicating a
stable growth overall with reasons to be concerned in specific geographic areas.
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Copyright Assetsure Limited 2007
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