If you’re currently looking into buying a property in Europe, or have recently taken the plunge and signed contracts on your dream home along the Mediterranean, you aren’t alone!
We have seen a significant rise in the number of Brits looking to buy property in the Eurozone over the summer months. Our Quarterly Index showed steady increases in the number of enquiries about buying property in southern European countries, while other traditionally popular long-haul destinations have showed flat or declining levels of interest as 2012 has progressed.
Spain and France still popular
Spain led the charge in the third quarter, continuing its surge in popularity from the first half of the year. Enquiries coming to us regarding Spain, made up 24 per cent of all the enquiries we received – equalled only by perennial favourite, France. This is up by a third from the 16 per cent of enquiries related to Spain that were received in the three months to the end of March 2012. The increased number of enquiries was also reflected in countries right across the Mediterranean, including Portugal, France, Italy, Greece, Cyprus and Turkey. For virtually all these countries, August marked the high point of the year, with a noticeable surge in activity.
Interest in Eurozone driven by key factors
No doubt the strong interest in the Eurozone especially is being driven by several key factors:
First are property prices, which in many countries including Spain, Greece and Cyprus, have seen dramatic falls under the weight of severe recessions and high local unemployment. When comparing like-for-like properties with the UK, such destinations offer a hugely attractive proposition to Brits – where, in many instances, a spacious, freestanding villa costs the same or less than a small flat in most UK cities.
Crucially, the £/€ exchange rate has also been favourable to British buyers, with the rate currently sitting at around £1/€1.249. This may single-handedly explain the surge recorded in August, after the euro hit a four-year low against the Sterling at the end of July.
Arguably, there is also a third factor at play – lifestyle. While lifestyle has always been a major reason people look at buying property in an overseas destination, either as a second home or a permanent residence, soaring costs of living, falling real wages, subdued economic activity and poor weather appear to be taking their toll on many folk in the UK. Many readers of our buying guides are saying they want to escape all the talk of doom and gloom, as well as the rat race of Britain, in favour of a more positive, relaxed and enjoyable lifestyle elsewhere.
USA, Australia, Canada and New Zealand
However the spike in enquiries from potential property buyers was not uniform across all countries and regions, with long-haul destinations largely remaining flat. American and Australian-related enquiries barely changed in the third quarter, while both Canada and New Zealand posted only the slightest of increases. All four destinations remain down on their performance in the first quarter, with all save for America being significantly lower.
Again, exchange rate movements are likely to be having an impact on the desirability of these locations, with the natural resources rich countries of Australia and Canada in particular maintaining stubbornly strong currencies.
Enquiries soar by 17%
Overall, though, as a company we saw the total number of enquiries for our country-specific property buying guides soar by 17 per cent to nearly 8,100 in the third quarter – a huge vote of confidence for overseas property and a clear indication that many Brits have an appetite for a life abroad. Indeed, a recent survey we conducted showed that 79 per cent of Britons had not been deterred from their overseas buying intentions because of the current economic malaise.
In the short term, we expect these trends to continue, given the fundamentals going forward appear set in their ways.
Southern Europe is likely to remain in the economic doldrums well into 2013 and possibly beyond, providing little fire beneath the property market to cause prices to heat up. This is providing ongoing impetus for British buyers to cast a serious eye over these markets, given their affordability when compared to similar lifestyle properties and destinations within the UK.
So, too, are Canada and Australia likely to remain subdued, as their respective currencies remain strong, reducing the buying power of house hunters with Sterling in their pockets. And with the US mired in recovery efforts following the devastating ‘super storm’, interest in purchasing in the US will likely remain soft at best – although there may be some possible bargains for those buyers still willing to take a look across the Atlantic.
Richard Way, Editor, Overseas Guides Company (OGC)
+44 207 898 0549