Buying a second residence is becoming increasingly popular amongst Europeans, according to The Royal Institution of Chartered Surveyors’ (RICS) European Housing Review. More people are purchasing second homes, either in their own country, or abroad.
These homes may be rented out, but are generally used by one family and directly owned. Most second homes are acquired for leisure purposes. The investment aspect is important since significant proportions of household assets are tied up in them. In countries with a high proportion of rental property like France, Germany and the Netherlands, it is not unusual for people to rent their primary home but own their second. Owning another residence gives people living in dense, urban areas access to a more spacious environment, often by the sea where there is a more moderate climate.
Since the UK has a moderate climate, expensive housing and many urban dwellings with gardens, it has traditionally ranked relatively low on Europe’s second home league. The second homes market has long influenced planning and design in the primary housing markets of many European countries.
The fortunes of second homes and retirement markets are closely entwined as those looking to retire are attracted to the same places as those seeking a second residence for weekends and holidays. Holiday homes such as those in the Spanish coast, can be lucrative investment opportunities, providing a combination of capital growth with rental income.
The proportion of second homes across the EU varies considerably, with some of the highest concentration located in Southern European countries because of both the high local demand and their attraction as classic holiday destinations. In countries such as Greece, Italy, France and Spain, between 10 and 15% of housing stock is comprised of second homes.
Although Southern Europe is better known for its second homes, there is also a high proportion of second residences in Northern Europe because of the number of affluent countries in the region.
The past five years has seen a particular boom in second homes in many countries, although this is now coming to an end. The second homes market is at a greater risk of a crash than the primary homes market, since they are the first thing to be disposed of when people need to economise.
However, an imminent crash is unlikely.
According to Michael Ball, author of the European Housing Review: ‘Europe has had some of the liveliest second homes markets over the past five years, but if people are looking for a second home as an investment rather than a holiday home, it is probably too late to expect good returns as the market is currently at its peak.
‘The trend for second homes is likely to grow in the long-term because of cheap flights and lower living costs abroad.’
More information on the European housing market is available at RICS