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As 2008 draws to a close a review is in order. Most foreign property markets across the world have seen falling prices and less demand.
International Property Markets
However, it is not all despair. Sellers of foreign property have seen excellent profits due to currency fluctuations. For example, the pound sterling has fallen significantly against the dollar and Euro. For more information on overseas property.
Property sold in Euro land or the USA has seen 20 to 30% profits this year alone when the sale proceeds have been exchanged for pound sterling.
In early 2009, property markets will continue to fall but the seeds of recovery may start sprouting up in the latter half of 2009. The low interest rates and the global financial stimulus packages should start to revive the international markets. Even in the UK where property prices have dropped dramatically, the pent-up demand could see prices escalate dramatically. New builds are down and first-time buyers will invest when mortgage loans become more freely available. New builds will be in demand and property at the lower end of the market will be the first to profit. Once first-time buyers return, those wanting to trade-up will return too.
Interest rates will be low, with talk of a base rate near 0%, mortgage repayments will be much lower than monthly rentals. The buy to let market will be revived with anticipated lower mortgage deals and good rental yields. On the downside, higher deposits may stall the first-time buyer market. However, once financial stability returns and competition returns to the mortgage market, lower deposits will become the norm again – perhaps not zero deposits though! Of course, unemployment is a problem and re-possessions may increase in 2009 too.
Time to Invest
Timing, as ever, is critical! When to return to the market? Unfortunately, our crystal ball is very misty but mid 2009 could be the time to invest. In particular, the re-possession market and auctions will be very attractive. Substantial reductions below cost price can be snapped up. With up to 50% off “new builds” sold within the last year. Surely, rental income will exceed the mortgage re-payments? With very low interest rates investors will want to see better returns so will be tempted once more into the property market. For more detailed information on investing in property.
Where to invest?
After recessions, there always seems to be a demand in capital cities. As the recovery kicks in, expect prices to increase. With the pound at a historic low (and may fall further), house prices in the UK are now favourably priced for foreign investment. London house prices have crashed and with the big shake out in the city financial area, re-possessions of attractive property could be coming to the market. Paris, Madrid, and Lisbon look attractive too – we also think the Cote d’Azur, France will attract buyers. Further afield, Florida will once again be a focus of attention as the US economy improves.
Read also about buy a vacation home.
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