BLOG: Confidence in overseas property is back
A timely combination of historically low interest rates, bargain property prices and a strong pound is making overseas property investment much more affordable. And it appears to be pulling buyers back to the market in their droves. Our enquiry levels were up by 90 per cent in the first three months of this year compared with the same period in 2013. Confidence is back.
There’s been a sizeable shift in interest for Spain in particular over the last six months, with the Bank of Spain reporting that investment by foreigners in the country’s housing market in 2013 was the highest for nine years, at €6.45bn, up 16 per cent on the previous year.
Prices in some of the most desirable areas of Spain have fallen by up to 50 per cent since 2007, but after a very difficult few years, prices are starting to creep back up in some areas, and people who have been putting their plans on hold for the last year or two are taking advantage of the favourable conditions open to them.
And contrary to popular belief, Spanish lenders are still willing to provide finance to foreign nationals, particularly if they can prove that they have a sound financial profile. Buyers can generally borrow up to 65 per cent of the value of the property, and rates currently start from just 3.33 per cent.
The situation in France is also very good. A slower property market has been pushing prices down, and under current market conditions, vendors are more likely to be receptive to offers lower than the asking price. Mortgage rates are at their lowest in more than 60 years, starting from just 2.3 per cent for a variable mortgage over 10 years.
And thanks to the pound trading very close to an 18 month high at €1.22 this week, buyers are seeing their money go a lot further. A Spanish villa worth €200,000 now costs £163,934 compared with £175,439 at the start of August last year. That’s a saving of £11,505, which is pretty good.
Confidence may be returning, but it’s still vitally important for buyers to seek the right advice and not to leave their brains at the airport. Bitter experience has taught many people that scrimping on independent legal advice can effectively cost them their holiday home. Buyers should always go through the same process that they would follow if they were buying a property in the UK.
Clare Nessling is director of Conti, the overseas mortgage specialist