More UK Investors Buying Property Abroad

All the negativity surrounding the domestic British property market has resulted in 3 out of 4 property investors looking overseas for their next property coup.

First time property buyers in the UK have been priced out of the market and for the first time in ten years house price inflation has fallen below wage inflation and property prices are reportedly stagnating.

Because first time buyers are so important for market flow it is now essential that the affordability gap is closed, but it has been predicted that it will take up to seven years for the affordability gap to close unless interest rates are cut.  All this negativity surrounding the domestic British property market has resulted in 3 out of 4 property investors looking overseas for their next property coup.

There has been a worldwide increase in property value, but few other markets have rallied so strongly and seemingly so unsustainably as the UK market, therefore there are still substantial and long term gains to be made from overseas investment property.

One third of property investors looking overseas are considering tapping emerging markets in the likes of North Cyprus, Turkey and the eastern eight with the remaining two thirds still favouring the tried and tested markets in Spain, France, Florida, Greece, Cyprus, Portugal and even Italy.

Around 550,000 Britons have already invested overseas and in just four short years the value of their international investment property has soared - more than doubling from £11.1 billion in value to more than £23 billion according to the Office for National Statistics.  The rise in the value of overseas property owned by Britons is of course attributed to worldwide property price gains, but it is also attributed to the fact that more and more are looking overseas for new investment opportunities.  In 2000 Brits owned 176,000 homes overseas and in 2004 that figure had risen to 256,609 homes abroad.

Clearly the increase in property prices worldwide highlights the fact that there is money to be made in the form of capital growth from overseas investment property.  But many investors are also aware that there is significant rental yield available from property abroad.  In the UK the buy to let market can return an average of a 5% yield - overseas, depending on the particular country and location very conservative estimates put average rental yields at between 6 and 10%, and the Office for National Statistics has estimated that last year alone Brits earned rental income on foreign investment property in the region of £190 million.

Because property values in the UK have soared to date and the Bank of England have kept interest rates competitive resulting in more mortgage lenders offering cheap deals to those looking to release equity, a place in the sun has never been easier to afford.  If the property market in the UK now remains stable those who have yet to buy are still in with a chance.  Many overseas destinations have property for sale at a fraction of British prices and even in Spain, where over 70,000 homes are already owned by Brits, there are still affordable properties to be had.

There’s no denying Spain’s attraction, it is the number one second home destination for Brits buying abroad.  France comes a close second; more than 51,000 homes worth around £5.6 billion are owned by British residents in France and in fact two thirds of all foreign property owned by Brits is in Europe.  But it’s not just Europe offering interesting opportunities to investors; more intrepid property explorers are now moving into the real estate markets in India, South Africa, Sri Lanka and even Pakistan for example, so whichever worldwide destination takes your fancy maybe you could soon be the proud owner of an overseas investment property.