Houses abroad could be the new investment trend for the young and
mobile
The continued rise in house prices is
making it very difficult for those trying to get onto the housing
ladder for the first time. Over the past two years the number of people
purchasing their first home has declined to the lowest level since
1981. The majority of first time buyers now have to buy with a friend
or relative and are purchasing smaller properties such as flats or
terraced houses. However, no longer able to afford to buy a house in
their hometown, some are now looking at overseas properties.
A survey by the pollsters YouGov for the Portuguese property developer
Oceanico Development
found that close to half of the 18 to 29 year olds surveyed were
planning to buy a property abroad. Two-thirds of these young property
investors, dubbed the "jet-to-let" generation, expected their foreign
purchase to be their first foot on the property ladder.
A director of Oceanico Developments, Simon Burgess, said: "As property
prices in the UK remain prohibitively high and the rental market
approaches saturation, it's only natural that investors turn to foreign
shores.”
"With lower property prices, healthy capital appreciation rates and
strong lettings markets, it's no wonder jet-to-let is emerging as the
new property investment trend. And the benefits are twofold - not only
are you buying a place in the sun, but by letting it out investors are
also generating income to cover their mortgage costs."
"More than two in five want to live in foreign climes because it's more
affordable than the UK, and a third recognise that overseas properties
are a better investment than the UK." said Mr Burgess.
The difficulties these young house buyers in the UK encounter when
trying to purchase homes where they want to live are highlighted in the
Halifax First Time Buyer Annual Review 2005 which found house prices
were prohibitively high in nine out of 10 towns.
The review also found that First Time Buyers now account for less than
29% of new home mortgages in 2004 – over the long term this
figure is nearly 50%. According to the bank, because of the difficulty
of saving for a deposit and funding mortgage repayments, the average
age of the first-time house buyer has now reached 34.
However, for first-time buyers who are fed up with the soaring UK house
prices and want to invest abroad, it’s not all plain sailing.
Many of the leading UK mortgage providers will not offer loans on
properties overseas. Those who opt for a mortgage in a foreign currency
always run the risk that a major weakening in that currency will
significantly increase the cost of their sterling repayments as well as
devaluing their new investment in bricks and mortar. 11th
February 2005
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