Time To Buy Property In Southern Europe?

Most European property markets have been in the doldrums since the credit crunch of 2008. But, 2015 could be the year things change.

 

The Land Registry House Price Index shows that in 2014, average UK house prices rose by 7.1%.  These numbers become even more interesting if you own property in London, or one of the other UK property hotspots, where growth is often double that of the national average.  As an example, the increase for London last year was 16.3%, and 10.8% in the South East.

But, says Jason Porter, director of expat financial advisers Blevins Franks, the important figures for those of us who have always looked longingly towards retiring to a European hot spot, are property values over the five years of the recovery, and how UK house prices have surged whilst Mediterranean Europe has fallen.

Nationally, the UK has returned to its 2007 highs, with London surging 37.9% ahead, and the South East 7.2%.  Contrast that with France, Spain, Portugal and Greece, and a fantastic buying opportunity presents itself.

The basket case has been Spain, with prices having fallen since 2007, and standing 40% lower. In the coastal regions favoured by UK expats the fall could be as much as 60%.

Portugal and Cyprus are in the region of 40% lower, whilst France shows massive disparities between Paris and its high class coastal resorts which have held their own, and other favourite retirement areas which are likely to have dropped by 20%-25%.

 

Better Exchange Rates

Sterling has continued to grow stronger against the euro. £1 now buys you €1.40, while two years ago that would have only been €1.14, a 22.8% increase in the value of the pound over the period.

This means for a fixed amount of capital you can now buy a property in Europe worth 22.8% more, which when you add in the huge disparity in property values means now is the opportune time to buy.

As Jason Porter of Blevins Franks notes, much of the slowdown in UK retiree migration to the Mediterranean has been because of the lack of economic recovery in these jurisdictions, the risk around sovereign debt, a fear of a European banking collapse, and a perception of increasing taxes in Europe.

Some of these worries have reduced, and banks are now re-entering the mortgage market.  With interest rates at their lowest ever, there are attractive offers for those with deposits.

Many property experts are predicting that we have reached the bottom in Europe and prices can now only start to rise. 

 

With all the other positive factors, Jason Porter suggests that now could be the best time to make the jump.

 

See the related article, Time To Buy Your Home In Spain?