The economic downturn is having a severe impact on activity within overseas second home markets and holiday home markets. Once seen as a positive lifestyle change for retirement and low-cost family holidays, more and more potential and existing second home owners our turning their backs on the dream of living abroad. According to a recent survey by these specialist currency broker currencies.co.uk over half of all Brits who already own a second home abroad would consider selling it during 2011. The survey cites a number of reasons including the volatility and weakness of sterling relative to other European currencies. A fluctuating Euro is making it increasingly difficult for people to forecast how much rental income they will generate to maintain their second home running costs and mortgage expense.
The survey highlighted that over 30% of people who rent out their second home saw falls in rental income and levels of occupancy in 2010. This reflects the falling numbers of UK Brits travelling abroad (to avoid keeping their annual holiday costs down in order to save money during the recession). Unfortunately for many second homeowners seeking to sell their property, there has been a price crash in the Spanish, Greek and Irish markets (as property booms have turned into busts).
Stephen Hughes, chief analyst at currencies.co.uk said: “For many the reality of owning a second home abroad has become intolerable and what started as a lifestyle aspiration and canny investment opportunity has become a financial millstone. Falling prices, currency fluctuation and a prolonged period of economic hardship have taken their toll.”
Likewise for the appetite for UK residents to retire abroad is also dwindling, as economic conditions harshen. In a recent survey by M&S money only 6% of Brits between the ages of 50 and 70 are considering retiring overseas. Although many would consider investing in a holiday home for their annual two week holiday, most stopped short of wanting to actually live permanently abroad.
This recent survey contrasts heavily with a previous survey taking back in 2006 (prior to the credit crunch), undertaken by the Institute of Public Policy, which forecast 20% of people want to retire overseas by the year 2050. The collapse in standards of living across Europe, the reduction in pension annuities (due to volatility of stock market returns) and the rising spectre of inflation on airfares, has all combined to put many would-be second homeowners off taking the life changing plunge. The shine really has come off the overseas dream which many Brits clearly wish for, but recognise they can no longer afford.