James' Blog about Property

Discussion, advice and philosophical points about all things property whether UK or International markets

Overseas property purchases show signs of recovery

Posted by jamesdearsley on September 10, 2009

In these last few weeks there has been a lot of positive press regarding the word “recovery”. There have been fantastic indicators in the UK including the FTSE 100 reaching 5,000 for the first time since October 2008, the UK domestic Market showing promise with increases of 5.6% on the year and predictions that houses will actually be worth more at the end of the year than at the start. There are other, more economic indicators as well; GDP figures are up on forcasts, the costs for banks borrowing from each other is now cheaper than before the credit crunch and unemployment continuing to peak and given this is a lagging indicator, this is actually good news.

What does this mean for the overseas property sector however, are we seeing such bullish news from this sector; one which has been hit hard by the credit crunch?

No one in the overseas property industry can state that it hasn’t been a difficult few years, arguably a tougher market to be in than the domestic market during recessionary times. When a market is essentially built around confidence there has been a bit of media mauling involved with overseas property – perhaps deservadly so given the great gains that some people were making.

When you take a few minutes to look at where this market is now, you seem to sense that the clouds have lifted somewhat and market sentiment is returning. Property in Spain is always the first to get a grilling from the media, perhaps unfairly, but then market leaders often get put in their place somewhat. Now that prices have been corrected  we are starting to see more positive articles suggesting now is the time to buy. Take this weekends article in the times for example – click here to see the full article – being very bullish about the market there.

There are other, more historic markets, that are also getting good press at the moment. France is getting some good exposure, despite Ryanair cutting a lot of routes to the west of the country, and Italy is getting some great press, especially given it hasn’t really had major booms or busts in recent years – in fact Italy has hardly suffered many price drops at all according to some recent articles – click here for some more information about Italy

There are some doubts however which will not go away which concern the more emerging markets. Markets like Dubai (arguably more developed than emerging but they just kept building) and Estonia/Lithuania/Latvia have all had falls of up to 50% and with no real evidence of stopping. I am afraid the old adage of location, location, location still rings true here.

Ultimately you need to think long and hard about why you would be buying an overseas property. People need to think practically about access, rental options and resale options when buying a property. I believe these are three reasons why property markets in Spain and Italy turn around so quickly – they have all these elements. I would also, despite a fledgling resale business, include Turkey in this mixture – access is opening up all the time and tourism is now overtaking Spain as the number one for British Tourists.

Therefore my tips for solid and safe “investment properties” are Spain, Italy and Turkey and I think I will keep this opinion for some time to come. At the end of the day, people must remember why they are buying property overseas; the majority of people want to do this because they want the sun, the sea and the sand – sometimes it is all too easy to forget this.

Best wishes everyone

James

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