2014 has seen a resurgence of Britons buying property overseas, seeking to capitalise on a strengthening pound in Eurozone markets, where house prices are still heavily discounted and mortgages are cheap.
Angelos Koutsoudes, head of OverseasGuidesCompany.com said: "With a jam-packed Autumn Statement last week and considerable economic developments throughout 2014, thoughts now turn to next year – the pension reforms could channel more money towards property purchases, both in the UK and abroad, but the uncertainty that precedes a general election could hold market activity back a bit until after May. We'll have to wait and see what direction the markets take as a result."
Affordability remains a serious issue in the UK
Affordability issues at home have pushed British property investors towards other European destinations which still offer capital appreciation and rental incomes at levels producing attractive returns on investment.
Combined with bumper European tourism figures for 2014, buying overseas property to rent out to holidaymakers is a trend re-emerging with force this year, powering through to 2015.
OverseasGuidesCompany.com saw a 17% increase in download requests of its Buying Guides during the first three quarters of 2014, compared with the same period last year.
Political uncertainty dampened British interest in 2014
It is believed that had it not been for the uncertainty during the run-up to the Scottish independence referendum and its unknown impact on sterling, investor appetite for property would have been considerably larger this year.
Spain retains its place as the top investment destination for British property buyers in 2014 and its economy, despite the woes caused to it by the financial crisis, continues to recover at a remarkable pace.
France has also enjoyed heightened interest although transaction volume remains flat, largely due to a restrictive tax regime and spiralling prices in popular regions. Confidence has also returned to Italy and Portugal, as buyers look beyond traditional core markets for better investment value.
Strong performance of the pound made Eurozone markets more attractive
Sterling's strength against the euro this year has also driven British buyers back to overseas property markets. The pound's rebound in value terms means that a €150,000 property calculates as £6,000 cheaper in December than it was in January to a UK buyer.
2015 may see another relatively quiet start to the year for British property investors, as the prospect of a pre-election budget in March and general election in May impacts the domestic housing market and strength of the pound. The second half of 2015 is likely to see a sharp increase in investor appetite for Eurozone property once political ramifications have panned out and buyers are better able to plan.
Slow start to 2015 but the British buying surge will continue
This year's Autumn Statement saw changes to stamp duty, introducing a graduated system that makes it cheaper to buy property for most people in the UK. This is expected to provide much-needed stimulus to the lower end of the housing market and will enable more people to invest in overseas property, particularly if they are reliant on a sale to make a foreign property purchase.
New pension rules announced earlier in 2014 will start to apply as from April 2015, allowing pensioners to use cash lump-sums as they wish rather than having to buy an annuity. This will almost certainly lead to a surge in UK buy-to-let investments and overseas property purchases.
Generally, the outlook for European real estate is extremely bright for the coming year, boosted by increased affordability to a much wider UK demographic than ever before. Continental European house prices are likely to be impacted strongly in areas popular with tourists, driving investors further afield in pursuit of bargain properties.
- Friday 12 December 2014