A survey conducted by UK based property portal primelocation.com suggests that 70% of visitors to primelocation.com/international-property show are actively looking to buy an overseas property, despite the current economic uncertainty (not that unsurprising as why would you go to a property show if you weren’t interested in buying!).Perhaps more interesting is that 28% said that they are unaffected by the current economic situation, while 22% who had put on hold their purchase plans were now back actively looking in the hope of finding a bargain. Another 10% said that they were just “looking” but did not intend to buy now.
The survey also looked at the countries the portal’s visitors are most interested in buying in – France was number 1 with 25%, Spain second (16%) followed by Italy and Portugal with 11% each. France has always been the number one destination for Primelocation “customers” but interestingly Spain and Portugal have increased in popularity since 2008, possibly in response to reports of falling property prices.
Primelocation also identify that while the number of people looking to buy holiday homes overseas remains unchanged from the previous year, indicating that the “dream” of a second home in the sun remains alive despite the dire economic backdrop. Interestingly however, the number of people looking to move abroad permanently has fallen possibly, as suggested in the report, due to the fall in the value of sterling against the Euro, but in my mind much more due to the economic climate and the costs / risks involved in moving, finding work / giving up work back home etc.
The report also highlights an oversupply of rental properties in continental Europe with the result that less people are buying with a view to using the property as an investment or income generator. This is undoubtedly the case in Spain, particularly on the mainland coast where around 50% of of all empty properties are targeted at the second home market and where tourist numbers have dropped and / or are less able to pay the prices originally commanded by these properties.
Other interesting statistics are that anticipated spending levels are very similar to 2008, and that most respondents prefer to purchase a property that requires minimal work and where they can start to use and enjoy straight away.
The reality is that these findings are not that unusual. Peoples aspirations do not change just because the economic climate does (however severe!). They may be more cautious and they may in reality postpone a buying decision but they will not stop looking unless their own personal circumstances have changed radically (unemployment etc). Many people buy for lifestyle reasons (these buyers predominate in Mallorca) and the “dream” stays alive even if more caution is required. For investors a falling market also opens up opportunities so again that they should remain interested is no surprise. What is clear is that in the “investor” group we have lost the novice, first time investor who was simply buying as part of the band waggon, and this is reflected in the slight fall in the investor numbers.
Serious investors remain and indeed may find this one of the very best times to buy if they undertake thorough market research and legal due diligence. Never has it been more important to get valuation advice and to work along side advisors that can identify not only suitable property – location, amenities, accommodation characteristics etc, but as importantly, that is correctly priced (see my comments on Asking Prices v Underling Values). As I have started to say, over the last month or so, we are at last seeing a larger number (a minority but growing number) of properties in Mallorca where asking prices are fairly much in line with real value. It is not difficult to find a client a property that meets their general requirements but it is much harder to find them one that also offers genuine good value and is not going to be purchased at a level that could result in a significant loss of capital / equity the moment the deed is signed.
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