France and Spain still the top choices for British buyers looking for overseas property
Despite ongoing economic uncertainty in the eurozone people are still interested in buying a second homes in countries like France and Spain with one international mortgage firm seeing a rise in inquiries.
France is still the top choice for prospective buyers, accounting for 43% of enquiries received so far this year by overseas mortgage specialist Conti, followed by Spain with 36%.
But the gap is narrowing. The firm’s data shows that France is down by 2% since this time last year while Spain is 3% up. Spain, in fact, accounted for more enquiries than France during the months of May, June and July. Overall there was a 62% increase in mortgage enquiries during the month of August which has turned out to be the busiest month of 2013 so far.
In addition, there’s been resurgence in interest in Turkey which has moved back up into third position, accounting for 10% of enquiries, up from 6% last year. Portugal is on fourth place with 8%, down from 10% last year and in fifth place is Italy with 3%, unchanged from 2012.
‘Traditionally, our enquiry levels tend rise around now, as people return home from trips abroad with dreams of owning their own place in the sun. But the uplift is even higher this year, perhaps the result of the UK’s hottest, driest and sunniest summer in the UK since 2006 inspiring even more people to invest in an overseas bolthole which they can escape to during the cold winter months,’ said Clare Nessling, director at Conti.
‘Prospective buyers are still playing it safe when it comes to location, with France and Spain still out on their own in terms of popularity. And there may actually never be a better time to buy as bargain property prices, historically low mortgage rates, good rental yields and a stronger pound are all making it more affordable for British buyers right now,’ she added.
She also pointed out that when it comes to a sound overseas property investment, it could be said that France provides all the fundamentals. ‘Borrowing costs have tumbled over recent months, and at the moment, mortgage rates are at their lowest in more than 60 years. Affordability has also been boosted by a slower property market which has been pushing prices down,’ explained Nessling.
‘And there’s the enduring appeal of easy access from the UK, better weather, and good rental yields. France also represents relative stability amid the global downturn. Mortgage rates currently start from just 2.1% and you can generally borrow up to 80% of the value of the property,’ she added.
She also said that buyers in Spain are in a strong position due to the number of homes available and the possibility of negotiating prices down with some very motivated vendors.
‘With banks such as UBS predicting that prices still have another 8% to go before bottoming out, buyers are taking the opportunity to snap up bargains while they can. It also helps that the country offers cheap and easy access from the UK, and rental opportunities are good too,’ she pointed out.
But mortgage availability isn’t as good in Spain as it was a few years ago. ‘But there are still lots of opportunities, especially if you have a healthy deposit to put down, and you can generally borrow up to 65% of the value of the property and rates currently start from just 3.23%,’ she added.
When it comes to Turkey, buyers can benefit from purchasing in a Mediterranean location, minus the effects of the eurozone crisis which has pushed some prospective investors to locations outside the traditional European property hot spots, according to the firm.
‘Tourism has risen dramatically over the last few years, which will ensure that demand for quality rental properties in the popular tourist areas in Turkey will continue to outstrip supply, making rental yields very lucrative,’ explained Nessling.
‘It’s also growing in popularity as a retirement destination, with many being lured by the warmer climate, lower costs of living, and excellent property value. For many, it’s simply a more cost effective location at the moment and certainly seems to be on an upward trajectory,’ she added.