Money Transfer Comparison Sheds Light on the State of the Overseas Property Market
The Coronavirus crisis had a huge impact on the property market, not only in the UK but worldwide. Many countries, particularly in Europe, implemented national lockdowns whilst the virus was at its peak, impacting the ability of potential homebuyers to view properties, or complete the purchasing process. With residents restricted to their homes, it was near-impossible for them to go out shopping for new ones!
This had an instant, and obvious, short term impact: During the height of the pandemic lockdown, in May, the number of property sales plummeted and property prices in the UK fell by 1.7% compared to the previous month, which is the biggest drop in 11 years. In Spain the standard real estate market is forecast to see falls of around 10 percent in average sale prices throughout 2020. Meanwhile in Italy, one of Europe’s worst-hit countries, property sales have also stalled and prices have dropped significantly. During this period, there was no good news for the European property market.
A Decline in Foreign Demand
In countries such as Spain and Portugal, the biggest impact on the property market has come from the decline in foreign demand: Buyers from the UK make up the biggest overseas market for both Spanish and Portuguese properties, and due to the UK Government’s ban on overseas travel during the first COVID-19 lockdown, these buyers simply weren’t able to travel in order to keep the property market moving.
Spain is a prime example of this predicament. Nationwide in Spain, there were 50,522 foreign property purchases between July and December 2019. This is predicted to come down to around 25,000 for the same period in 2020. Because overseas buyers are so important to the Spanish property market, any decline in sales is worrying, and will ultimately have a negative impact on the GDP of the whole country.
The good news is that, before COVID-19, the number of UK investors choosing to purchase property overseas was incredibly buoyant. What‘s more, generally interest rates across Europe were low and unemployment (especially in Spain, where unemployment figures have always proven problematic) was also continuing to fall. The average unemployment rate across the Eurozone stood at 7.5% at the start of 2020. Whilst there is no denying that COVID-19 has changed everything, the fact that the market was stable before the pandemic gripped should stand it in good stead for a quick recovery once the pandemic has passed.
Expert Insight from Money Transfer Comparison
During May 2020, Money Transfer Comparison reported an unprecedented drop in activity to almost 0%. This means that no one was using their website to search for money transfer companies to pay for their overseas property purchases. As a result of all of the factors outlined above, it should come as no surprise that purchases stalled and therefore cash transfers for property purchases from the UK to overseas also stalled.
Money Transfer Comparison is a website whose main audience is property buyers hoping to invest in property overseas. An excellent resource for those who are researching, or ready to purchase, property abroad, MTC.com have created detailed, in-depth, reviews of the best international money transfer companies on the market. Whilst the website is committed to helping potential property buyers transfer their funds at the lowest possible price, they also pride themselves on never compromising on the safety or security of their users’ finances.
A Market Ripe for BounceBack
With massive unemployment, wage cuts, business failures, and job uncertainty, many people are likely to be cautious about making big investments, particularly in property. It is often the second home market, particularly overseas, that is one of the first markets to suffer as a result of widespread economic uncertainty. But so far, this doesn’t seem to be the case.
Although they had bad news about the state of the overseas property market in May, Money Transfer Comparison report that in October, activity levels had bounced back considerably. When British buyers were free to resume their overseas travel and their overseas property investment, they did so and in abundance. What’s more online property searches from UK-based consumers continued to be bouyant, even during the height of the lockdown period, meaning that the concept of moving overseas, or purchasing property overseas, continued to be appealing to the UK market. The same was true of European buyers choosing to buy property in the UK: sales levels and online searches soared after the national lockdowns subsided.
Many British buyers are keen to buy property and register for residency in their chosen European country before the end of the Brexit Withdrawal agreement period on 31 December 2020, which goes some way to explaining why the volume of transactions from foreign consumers was back to normal for the time of year. After the Withdrawal Period ends and the UK leaves the EU, securing residency rights will be slightly more complicated, so it is understandable that many buyers are hoping to fast track their transactions now.
The details of how UK citizens can secure residency in the Eurozone after Brexit have yet to be released, but what is clear is that at this point, this is not having any impact on the demand for properties overseas from British investors, or the desire from UK citizens to either relocate or retire overseas.