With UK house prices soaring, the last decade has seen many property
buyers focus on foreign markets, a trend which is likely to continue
despite the current economic conditions according to research from
Savills and www.holiday-rentals.com reported by the Daily Telegraph.
The impact of the credit crunch on the British housing market has raised
concerns that foreign property might be the next victim, as new buyers
will be hit by both tighter mortgage lending conditions and rising fuel
costs.
Buyers are usually younger and not afraid to
invest in new-builds in new locations such as Bulgaria, Morocco or
Turkey or city hot spots like Prague or Dubrovnik. They buy their
property with the intention to rent it out and make as much money as
possible before they sell it on.
However, these investment buyers are often not affluent and have taken out large
mortgages, some over 90 per cent of the property's value. They are
therefore heavily reliant on the income they generate by letting the
property out.
Although the research suggests that the investment market has diminished slightly, Savills believe that the demand for foreign property will change, but not collapse entirely.
Savills researcher Jacqui Daly told the Telegraph:
"We will see a return to the traditional use of the holiday home as a
lifestyle choice, and that demand will actually rise in the near future.
"Our survey showed that 18 per cent of people are buying for their
retirement," she revealed. "There are vast numbers of over-50s and
over-60s wanting homes overseas, often in traditional areas such as
Spain.
"Demographics show there are many more of these to
come. They have a lot of equity in UK homes, so most won't need to
borrow at all."
Also, the increase in fuel prices has not had
a huge impact on foreign property owners so far. Only one in ten
respondents in the survey said their considered selling their property
or buying a new one nearer the UK if "green taxes" were to increase the
cost of their holiday.
Greg Grant, managing director of holiday-rentals.com, believes that owners of foreign properties will not lose out, although he expects many owners to change their approach
to letting their properties.
Mr Grant told the Telegraph: "Those who have previously kept their homes to themselves may begin renting out to maximise income in these tighter times. They'll see that a
month's rental can, if timed well, pay for much of a year's running
costs on a home."
"Renting does not suffer during a downturn,"
he pointed out. "We expected to see falls in bookings but so far we've
seen no reduction in website traffic from people wanting holidays.
Families, in particular, may desert hotels and save money by renting a
home."
buyers focus on foreign markets, a trend which is likely to continue
despite the current economic conditions according to research from
Savills and www.holiday-rentals.com reported by the Daily Telegraph.
The impact of the credit crunch on the British housing market has raised
concerns that foreign property might be the next victim, as new buyers
will be hit by both tighter mortgage lending conditions and rising fuel
costs.
Buyers are usually younger and not afraid to
invest in new-builds in new locations such as Bulgaria, Morocco or
Turkey or city hot spots like Prague or Dubrovnik. They buy their
property with the intention to rent it out and make as much money as
possible before they sell it on.
However, these investment buyers are often not affluent and have taken out large
mortgages, some over 90 per cent of the property's value. They are
therefore heavily reliant on the income they generate by letting the
property out.
Although the research suggests that the investment market has diminished slightly, Savills believe that the demand for foreign property will change, but not collapse entirely.
Savills researcher Jacqui Daly told the Telegraph:
"We will see a return to the traditional use of the holiday home as a
lifestyle choice, and that demand will actually rise in the near future.
"Our survey showed that 18 per cent of people are buying for their
retirement," she revealed. "There are vast numbers of over-50s and
over-60s wanting homes overseas, often in traditional areas such as
Spain.
"Demographics show there are many more of these to
come. They have a lot of equity in UK homes, so most won't need to
borrow at all."
Also, the increase in fuel prices has not had
a huge impact on foreign property owners so far. Only one in ten
respondents in the survey said their considered selling their property
or buying a new one nearer the UK if "green taxes" were to increase the
cost of their holiday.
Greg Grant, managing director of holiday-rentals.com, believes that owners of foreign properties will not lose out, although he expects many owners to change their approach
to letting their properties.
Mr Grant told the Telegraph: "Those who have previously kept their homes to themselves may begin renting out to maximise income in these tighter times. They'll see that a
month's rental can, if timed well, pay for much of a year's running
costs on a home."
"Renting does not suffer during a downturn,"
he pointed out. "We expected to see falls in bookings but so far we've
seen no reduction in website traffic from people wanting holidays.
Families, in particular, may desert hotels and save money by renting a
home."
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