A year that began with uncertainty over the future of a crippled Eurozone and hesitancy amongst foreigners, as well as Europeans, to own any type of euro asset, particularly property, is ending with a resurgence in sales in key euro destinations, where property values remain heavily depressed and the nationality of buyers is becoming increasingly diverse.
Article written by The Overseas Guides Company
Throughout 2012 property prices in many Eurozone countries have remained typically at levels 30-50 per cent lower than the market’s peak 4-5 years ago. Combine this with a weaker euro, incentives by governments to attract buyers from non-EU countries and uninviting returns from banks on cash investments, and it’s understandable why property agents have been reporting a hike in foreign business in the second half of a rollercoaster year.
“Our partner agent in the Costa Blanca, Home España, are the busiest they have been in 10 years,” says Richard Way, editor at The Overseas Guide Company (OGC). “Similarly, our partner in Portugal’s Algarve, Ideal Homes Portugal, confirmed the number of foreign buyers, including British people, increased rapidly in 2012 compared to 2011. Both expect this trend to continue into 2013. Here at OGC, we’ve noticed traditionally popular destinations in the Eurozone, notably Spain, swing back into favour as the year has progressed. August was especially encouraging, in part, due to the euro falling to a four-year low of €1.28 against Sterling in July – it was €1.19 in January, and at the start of July 2011 less than €1.11.”
While British people are buying again, their share of the market is smaller, as property agents in general are reporting stronger demand from Scandinavians, notably Norwegians, whose buying power has increased with the weaker euro, as well as French, Belgians and Germans. However, 2012 has also seen the emergence of Russians as a major player in the market, and this trend is only likely to continue in 2013.
“Recent new laws allowing non-EU nationals to gain residency in a country when they buy property of a certain value there are being introduced by some governments, in order to attract wealthier buyers, particularly Russians and Chinese,” continued Way of The Overseas Guides Company. “In October, Portugal introduced its ‘Golden Passport’ law, which requires applicants to invest a minimum of €500,000. Similarly, in Cyprus their threshold is €300,000, while under Spain’s recently proposed scheme, it is likely to be just €160,000. In a similar vein, although not in the EU or Eurozone, Turkey also relaxed its reciprocal ownership laws in 2012, allowing it to benefit from Middle Eastern and Russian investors. Our partner there, Spot Blue, reports a surge in interest from Middle Eastern buyers.”
Austerity measures were inevitable in hard-up Eurozone countries in 2012 – and for the forthcoming year – and typically they have affected property-owners, resident or non-resident. Greece introduced a property tax, that was payable only through electricity bills by direct debit – so no escaping it, while Italy also re-introduced a property tax. In Spain, as from January 2013, the reduced VAT rate levied on new property is due to rise from its current 4 per cent to 10 per cent and mortgage tax relief will disappear. Meanwhile buyers and vendors alike will be watching closely to see what effect Spain’s new state-backed ‘bad bank’, set up to help commercial banks offload toxic debt and repossessions, could have on the market, and whether prices can be dragged down any further in Spain.
In the USA, 2012 has signalled the start of recovery in the economy and housing market, which should continue during 2013. The national median existing home price is expected to rise 6 per cent to $176,100 for 2012 as a whole, and increase another 5.1 per cent next year to $185,200. Tight mortgage credit conditions are the only thing holding up more bullish growth in the American real estate market.
“There is certainly a feeling that the really eye-watering deals in Florida, typically foreclosures or short sales, have been creamed off and are much scarcer than at the start of the year,” concluded Way of The Overseas Guides Company. “It’s still a very affordable place to buy a holiday home, one which could pay for itself if in the right location and managed sensibly.”
For more information property for sale overseas, check out the listings on Rightmove Overseas.
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The views and comments herein are those of the author and do not necessarily reflect the views or opinions of Rightmove Overseas, Rightmove Group Ltd or Rightmove Plc