France still top choice for overseas property investors
France is still the number one choice for British people buying property abroad, according to the latest overseas property hot spots report compiled by Conti, the overseas mortgage specialist.
The country is top of the list for the fourth year running, accounting for a 45% of mortgage enquiries received so far this year. This is the country’s biggest share achieved to date, and compares with 39% last year, and just 15% back in 2008. Spain, in second place with 33% of enquiries, is also up from 31% last year and from 14% in 2008 which the firm says is due to excellent buying conditions and signs that the market is starting to bottom out. Portugal with 10% of enquiries is in third position for the second year running. Although its share is down by 2% on last year, interest has picked up again over the last three months as falling property prices entice buyers back. Interest in Turkey, on the other hand, has declined over the last year with the country now accounting for just 6% of enquiries, perhaps due to exchange rates working in favour of buyers in the euro zone. ‘Buyers have increasingly been sticking to locations they know and trust, which is why France and Spain are out on their own at the moment, and Portugal is starting to rise in popularity again too,’ said Clare Nessling, Conti’s operations director. ‘The euro zone crisis continues, but the growing strength of the pound against the euro is boosting the budgets of people in the UK who are looking to buy property in these locations. This together with some bargain property prices and low interest rates, are making it even more affordable. It also helps that these countries offer easy access from the UK, and rental opportunities are good too,’ she added. Conti says that against the volatility of the British market, French property is seen as an increasingly solid investment option over the long term. It’s also affordable, with rates currently starting from just 2.79% and mortgage availability is still generally very good. It also pointed out that while French property hasn’t been reduced to bargain basement prices, it generally remains well under UK averages, with plenty to choose from within a budget and the current strength of the pound allowing buyers to get more for their money. Also in France as loan to value ratios are still high it’s quite normal for clients to borrow up to 70% of the value of a property with an interest only mortgage and up to 85% with a repayment mortgage. It says that bargain prices and the opportunity to negotiate these down even further with some very motivated sellers has made Spain attractive again, along with historically low interest rates and the weaker euro. Signs that the market is improving are starting to lift the confidence of prospective buyers and mortgage availability is generally good with maximum loan to values still around 65 to 70% and rates from 3.35%. It adds that the gloom hanging over Portugal’s economy doesn’t seem to have deterred British buyers, who are being drawn back into the market by falling property prices. Figures from Statistics Portugal (INE) show that the average property price in the country decreased by 8.9% in the year to May 2012, and with prices projected to continue falling for the remainder of the year, and domestic demand remaining weak, buyers should be well placed to pick up a bargain. In Portugal it is still possible to borrow up to 70% of the value of a property and even 80% is possible and rates are very reasonable, starting from 3.09%.