According to new data from international estate agency Knight Frank, the number of Brits buying second homes rose by 2.6% last year, which not only reversed 2008’s fall, but also took the number of British second homeowners to the new high of 245,384.
Unfortunately, according to the research most of the second homes purchased by Brits in 2009 were purchased in the UK. This has been put down to a combination of the strong euro, the green initiative behind holidaying at home, and the trend of “staycationing”; exploring what our own landmass has to offer. A recent Telegraph article said that sales of overseas property dropped 80% last year.
The question the overseas property industry must ask of this data is: will the buyers come back in 2010, 2011, or will this have forever cancelled the British lust for holiday homes and investment properties abroad?
The short answer is: a bit of both; yes they will come back, and in fact there are clear signs that they already are; but yes the credit crunch has forever changed overseas property, or certainly made a lasting change, in that people will no longer fall over themselves to invest in emerging market buy to let’s simply because they are cheap; and not without looking into the supply/demand fundamentals in the locality.
In fact, in yet another irony to emerge from the currently bizzaro-world that is the international economic scene; the currency fluctuations and debt time-bombs are actually increasing sales of overseas property.
Never before (or certainly not in my lifetime) has there been so much fear over inflation and currency devaluation making our savings halve in value or worse. And so never before have so many people sought to put their cash savings into tangible assets. Many people are putting their money into gold bullion, but the effect of this since the start of the crisis has already sent the price of gold soaring.
The massive price of gold is making property the better option. But not property in the US, UK or Europe, where the debt balloons could yet cause further property deflation, but in markets that are considered to be insulated from the financial madness. This is leading to increasing sales of property in the Caribbean, where Cardea property consultants sold $7 million worth of prime St Lucia property in January (Overseas Property Professional – membership required).
Digression over; sales of property overseas have been increasing gradually since last April. Initially all buyers were paying cash, and it was predominantly lifestyle buyers favouring high-end property in established markets. This has slowly started to change, with clear signs that investors were returning appearing in things like Germany entering portal top 10s etc.
This was reinforced recently when major portal Primelocation reported a 55% increase in searches for property in Cyprus and Bulgaria, and a 60% increase in searches for Turkish property. The portal also reported a 25% increase in overseas property searches on the whole.
The increase in sales last year caused overseas realtors to breathe a sigh of relief, and the return of investors another. However, all agents reporting sales are also reporting that buyers are grilling them for more information on the properties and developers, and that most buyers buy only after visiting the development of choice. This means that agents have to step up their game, they have to make sure they know the properties they sell inside out, and that any investment potential is backed up by a lot of research on their part.