Property market landscape altered because of recession
Two years on from the credit crunch the overseas property market is radically different with former dynamic locations altered considerably, according to a new report.
The latest overview from Rightmove Overseas shows some of the winners and losers over the last 24 months.
It found that Dubai is among the worse hit with searches for real estate down 80% compared withy 2008. Eastern Europe has also taken a battering with previously hot destinations for investment returns falling out of favour.
One success story though is Germany with searches up 32% on 2008. ‘It’s maybe not as glamorous as France or Italy, but has many of the same benefits and seems to be carving out a niche of its own. It’s been consistently climbing our search charts and this month again features in the top climbers and top trending areas. On this evidence it’s certainly undervalued and overlooked,’ said Robin Wilson, head of overseas at Rightmove.
The report also shows that Spain has proved resilient, recovering twice as fast as France. Overall investment destinations are failing to recover at the same pace as permanent move lifestyle destinations.
‘Two years on from when the credit crunch first started to really bite, it’s clear that the overseas property market is radically different. Many of the market dynamics that used to be in place have gone, some would argue for good. For example, you’d be hard pushed to find a casual investor looking to make a quick buck by flipping off plan apartments in out of the way places, availability of mortgage finance is much harder and many businesses have failed to adapt to the new conditions,’ said Wilson.
‘However, the appetite for overseas property hasn’t diminished. People are still dreaming about a life abroad, so we rewound our database to look at how the credit crunch has affected interest in some of the top destinations. What’s clear is that whilst only a few countries have really bucked the trend and gained on their 2008 position, there are big gaps in how fast some countries are recovering, if at all,’ he added.
According to David Kerns, head of private clients at Moneycorp the weakness of sterling throughout the recession has certainly contributed to the fall in demand for overseas property over the last two years. ‘The rate of sterling against the euro was €1.24 in July 2008 and fell as low as €1.04 in December of 2008. It has been a bumpy couple of years for the pound and the recession has also raised awareness of the benefits of using a currency broker when buying an overseas property for many individuals,’ he explained.
‘Things are looking up for overseas property hunters though. The pound has rallied, reaching highs against both the euro and the dollar in the last couple of months. This could explain why the USA has seen as 13% increase in searches throughout July, and why France and Spain have both seen a 5% increase compared to June of this year,’ he added.