Savills reports the obvious collapse in Irish property values is attracting a growing number of potential purchasers, with residential property viewing figures up x4 in Q1/year-on-year, especially within the Greater Dublin area.

Savills Ireland, claims it is not unusual for 30 or more parties to arrive for a 30-minute open-house. This is put down to renters, of the past 2 or 3-years who have been watching house prices to fall to affordable levels, being fed-up of waiting and who now want a place of their own. Increasing rents, in some cases, makes it more cost effective to take out a mortgage, with easing credit also making buying more attractive.

 

Along with Portugal, Italy, Greece and Spain, Ireland may seem to be offering extremely attractive deals. But do remember, these five members of the EEU are still experiencing a significant fall in property values.

 

In a recent Blog about Spain, we reported the Spanish Housing Ministry saying property values have returned to 2005 prices and that they expect a further decline, before the end of 2013, of 20%.  

 

Whilst Spanish, Irish or any other country is leaning on Banks to pump up property sales, we can reasonably expect values to decline further. If Spanish sentiment is indicative, Irleland could fall a further 20% too, by the end of next year.

 

Always do comparative research before making any offer to buy, and especially any investment property.

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When comparing property deals in Europe with the USA, which one offers a better opportunity for investment at this time?

Brit's are once again buying in Europe with the expectation that the worst market drop in years will soon be over and they can profit from property once more. Some pundits herald the bottom of the market has been reached and now is the time to pick up discounted bargains in Spain, Portugal and Cyprus.

Do they know something most investors don't? Have some European property markets really reached bottom? Or, is it just the latest in a long line of postulating? 

The property market in the USA, for instance, has been through its own share of flatulence, prompting similar debate as to when is a good time to invest. Property investors naturally want to buy at/near the bottom of a market to attract best-buy opportunity and capitalize on extra growth. The skill however, is in predicting with reasonable certainty when a market has fallen as low as it is likely to go. 

Property in the EU has long been the favourite choice for us Brit's as a trip across the pond by boat, train or plane is very straightforward and not too costly. As most EEU members have adopted the euro-currency, money transfers and buying property is perceived as being less complicated, too.

Most of the good news about Europe at the moment rests on the depreciating euro against sterling, which means you get more for your pound. Interest remains low too meaning mortgage rates are particularly favourable at this time.

There are also huge discounts on Spanish property, at the moment, as the Housing Ministry puts pressure on the Banks to get property back onto the market. In Spain, property values have returned to pre-2007 levels and the Housing Minister predicts it will fall further by as much as 20% before the end of next year.

 

This has caused a rush of investors to head for the Costas to snap up whatever they can find, and herein lies the danger with Spain, Portugal, Italy, Greece (even Ireland).

 

Like most Western European Nations, Spain and its banks have a mighty economic mess to sort out. Even France recently had its credit rating downgraded, suggesting that the problems of the Eurozone are not yet over. France has amended capital gains tax rules too, which will penalise those owning high value second homes.

As Euro-Governments apply ever tightening austerity measures, property markets, in the short and medium term, will remain volatile and there is little doubt that Europe will continue to suffer a crisis of confidence as lack of cohesion continues to impact.

 

But, it is easy to get lost in negative sentiment so, it is worth remembering that Europe doesn't offer the only property investment potential ...

 

As always, if you exercise prudence, good opportunity can be found in the USA too, if you know where to look and, don't mind the air-time to get there.

The US property market, and more importantly the economic outlook, is looking much better when compared with Europe. In recent months housing data appears to be far more positive with existing home sales rising to a 10-month high of 4.42 million units.

 

We recently listed investment opportunity in a Dakota Oil Town boom, where thousands of oil workers need immediate accomodation which can be purchased for a mere £30,000 producing remarkable rental yield of 40%pa.

US home builder optimism has increased with a seasonally adjusted annual rate of 685,000, the best level in 19-months.

As US stockmarkets outperformed Europe last year, there is reason to speculate the crisis in the Eurozone won't be fully resolved before the end of 2012. The value of the US dollar has declined against sterling that will help boost US exports, employment prospects and give the British property investor more buck for their pound.

Accordingly, it is worth exploring property investment opportunity wherever strong and growing rental demand exists. With excellent value and a more stable economic outlook, it is believed that current market conditions will support the USA rather than Europe throughout 2012.

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The British Embassy in Spain warns potential investors they could find themselves out of pocket when buying in Spain!

As investors rush to find that bargain in Spain, UK property investors are urged to seek correct legal advice from an experienced British law firm before buying property in any foriegn country.

 

With so many properties coming to the market, it is more important than ever to investigate quality of build, especially the bits that cannot obviously be seen.

Buying off-plan in a significantly falling market is always a higher risk strategy and Spain remains in free-fall at the current time (along with Ireland, Italy, Portugal and Greece). 

 

But bargains should exist provided your research is thorough and complete! If anyone tells you their deal is only available right now and you will lose it if you walk away ~ walk away. 

 

Unless you are buying at auction or using a reputable discount property website, a genuine face-to-face deal will give at least 24-hours thinking time, away from the sales-pitch.

 

 

You may like a country retreat but, if you are looking to make money over your use and expenses, you need to choose a location where the masses want to stay. For serious rental opportunity, it is essential the property is within walking distance of leisure amenities, shops, nightlife and public transport. Such properties are, of course, more expensive but you are likely to attract higher holiday demand.

 

 

Investing in Spanish property, at this time, must be approached with caution.  Don't accept anything that isn't in writing, on company letter-head. And engage an experienced agent familiar with your foreign market if you want to save money and keep the buying process quick and efficient.

Most Spanish property market commentators agree that home prices in the country still have a long way to fall before the end of 2012, accelerating a 4-year decline in residential property values that are already 30% below the peak reached in 2007.

 

 

Despite historically low demand and a glut of homes on the market, vendors, residential developers, estate agents and banks have been reluctant to slash property prices sufficiently to meet today’s perceived market value, in order to avoid major losses.

 

Banks however, are now being forced to sell properties in Spain cheaply and Economy Minister Luis de Guindos, is leaning on lenders to make €50bn (£42bn) of additional provisions and capital charges for losses linked to real estate over the next 2-years.

 

Consequently, residential property prices are poised for a further *12-14% drop this year, leaving a quarter of all homeowners in negative equity, as the government forces the banks to sell real-estate holdings. 

 

That’s the most since the National Statistics Institute started tracking values in 2007 and, based on an analysis of 800,000 mortgages, Standard & Poor’s forecasts borrowers with negative equity may increase to 25% this year, up from 8% in 2010.

Fernando Rodriguez de Acuna Martinez, a partner at the Madrid-based firm says, There will be more serious price drops this year because of the government decree ... Banks are now prepared to incur big losses on real estate to shift all they can.

 

*source: R.R. de Acuna & Asociados 

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Portugal’s economic problems have been well documented over the past 3-4 years (along with Italy, Ireland, Greece and Spain), as has the dip in property sales and the rate in unemployment.

 

Local people have been buying less investment and holiday property increasing demand in the rental sector.

 

 

Property prices are at an all time low! Developers and sellers across the country have been forced to drop prices as buyers negotiate harder. 

Quality property in prime location has become available at the lowest prices in years. Buyers who previously could not afford high specification property in prime locations now have the opportunity to take advantage of the market conditions. Not only this, but due to an increase in rents, the savvy investor has the opportunity to see an immediate return.

Portugal remains a wonderful place to visit or live. It is a safe family destination with friendly people, consistent weather, beautifully clean beaches and stunning countryside.

 

The old saying of buy-low/sell-high is compelling in Portugal at this time.

 

With typical discounts of 30-40% below market value and property prices that may have bottomed out, such a huge discount margin offers an uncommonly prudent investment.

The fact that the lettings market has benefited from the fallout in the sales market presents a fresh buy-to-let opportunity for buying in Portugal.

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