Is this the Best Time to be Buying in Europe?
Despite the majority of house prices plummeting in the Euro zone, is this really a good time to consider purchasing a property abroad.
Recent reports show that the majority of people feel now is the prime time to buy as searches for overseas properties have increased a considerable amount on UK property search portals.
Property is definitely cheaper for those of us who are paying in pounds. If you were to buy a property now in Normandy for €100,000 it would cost you approximately £80,000 whereas this time last year it would have cost you £92,000.
The main countries for concern are Spain and France. This is because Spain has an uncertain economic future but this is just one reason to be careful when buying here. Even though property prices are getting cheaper, they are still overpriced based on the historical average vs. rents. This tells us the fair value of what the properties should be priced at, by dividing the price of average annual earnings from the property and then this is compared to the average over the last 20 years. This calculation shows how far off the asking price is, compared to what it should be.
The most recent study by The Economist magazine shows that properties in Spain are overvalued by 27% even though the prices are down by 7% compared to last year. France is currently overvalued 47% but has had a 4% increase in property since last summer which is a lot worse than Spain.
From the report the best places to by at the moment are in Germany and the US, where property prices are undervalued by 19% and in Japan prices are undervalued by 35%.
No matter which country you choose to purchase a property in overseas, make sure you have a good overseas property insurance
policy. You never know what can happen, even in the best economies, so make sure you are protected.