With property prices falling in many parts of Europe, and the prospect of stagnant markets and recession looming both here and in the Euro-zone, many prospective buyers might be thinking of putting off buying overseas property. However, different considerations apply to buying overseas as compared to buying in the UK. Some experts, including Paul Collins of the BuyAssociation, say that provided a little careful research is carried out, now could be a good time to get a bargain in Europe.
Looking to the long-term
If you’re thinking of buying European property, then now is not the time to do so if you’re looking to make money in the short-term. However, if you are committed to the long-term, you could find that you’re able to pick up a great property at a knock-down price. With the future of the Euro still uncertain, it’s likely that the market has not yet bottomed-out in some areas, so don’t take on a large mortgage to buy: you need some equity to protect yourself against possible future falls.
The big European markets most likely to continue to fall are Spain, Italy and Greece. That doesn’t mean you shouldn’t buy in those countries, but that you should make sure you’re not stretching yourself to your limits if you do. Remember that property markets can vary locally, so do some research. Parts of Spain in particular are over-supplied with property aimed at overseas buyers, and are therefore likely to be hit harder by market falls.
Alternatively, look outside the traditional holiday destinations. It may be that some of the weaker Mediterranean economies are forced to leave the Euro, with a core remaining which will definitely include France and Germany, whose economies would probably strengthen as a result. Or head outside the Euro-zone completely and look for bargains in countries like Romania or Bulgaria.
Most buyers plan to rent out their overseas property when they’re not using it themselves. Even if you hadn’t planned to do so, it may be worth considering. If you had written off buying in the current climate, then the rental income may make buying now much more viable than you’d thought. Remember that overseas property insurance should include cover for loss of rental income. Find out what local rental levels are like, and compare them to prices. If both are low, be careful, as that means there is likely to be a property over-supply.
There is no doubt that there are still good deals to be had in European property, for those willing to do a little ground-work before buying and commit to the market for the long-term.