Saturday, July 2

£40k for a holiday home – should you go for it?

A home in the sun for £40,000: Is it too good to be true?

We look at the pros and cons of buying on the continent now it’s become cheaper

As the pound shoots up against the euro, the price of a bolthole on the continent is rapidly shedding its cost.Last summer the value of sterling was around €1.14, whereas it’s now hovering at €1.26.Coupled with a few years of falling prices in Europe and, suddenly, that farmhouse in the Tuscan Hills or villa next to the beach looks remarkably good value – especially when compared with overheated parts of the British market.It’s entirely possible to pick up a property for as little as £40,000 in southern Italy and a home for less than £100,000 in Spain and Portugal (See gallery below).

Perhaps it’s not surprising, then, that overseas property specialists are reporting surging interest.

Finance firm Conti said enquiries in the second quarter of this year increased by 38% compared with the same period last year.

“For someone considering a home in the eurozone worth €200,000, the property now costs £158,730 compared with £175,439 at the start of August 2013. That’s a saving of £16,709,” commented Clare Nessling, director at Conti.

So is now the time to buy and if so where?


Normandy, France £308,000 (Chestertons International)Normandy, France £308,000 (Chestertons International)

Our continental neighbour is a firm favourite among Brits. It’s easy to get to and has glorious cheese, wine and gastronomy awaiting our arrival.


Mortgage rates in France have reached record lows in recent weeks to average just 2.85%, while a 20-year fix is available at 3.25%.

“Since the start of the year government bonds have decreased by almost 70 basis points (0.7%) and this has pushed high street lending down even further,” commented John Busby at French Private Finance.

He reports that availability of finance helped stimulate a bumper number of ski property sales in the winter just passed.

Guy Watson-Smith, director of agency Fine & Country Cannes, said: “The negativity surrounding the property market when President Hollande took office has largely dissipated and the market has begun to pick up, aided by some policy decisions which were aimed at re-igniting the market. Most notable amongst them is the temporary relief of a 25% reduction in capital gains tax.”


At the start of the year, the national association of French estate agents gave a gloomy outlook for 2014, predicting that average prices would fall by around 4%, after already tumbling 2.9% in 2013.

It recently highlighted Champagne-Ardenne, Provence-Alpes-Côte d’Azur and Lorraine as three of the worst performing regions.

The French economy’s ailing health – with unemployment up and growth stuttering and no simple solution on the horizon – can mean that prices, indeed, have further to fall.

Where would the experts buy?

Guy Watson-Smith of Fine & Country says that Provence is an area much loved by foreigners with its charming villages, varied and beautiful landscapes and proximity to mountains, sea and of course the French Riviera.

“Prices are a little more affordable than they are on the Riviera, and are inching upwards slowly, fuelled by demand from the UK and such places as South Africa and Scandinavia,” he said.

He also picks out Bordeaux and the South West as popular areas that are more affordable than the Mediterranean coastline.

Meanwhile, Neville Page, head of Chestertons International department, selects Normandy.

“Property prices in the Calvados area (Normandy) have dropped by 10% in the last year and there are still important negotiations taking place,” he said.

“Prices are very low at the moment and we expect them to rise in the near future as we are getting more interest from serious buyers.”


Murcia, Spain; £79,000 (Mercers)
Murcia, Spain; £79,000 (Mercers)


Sunshine, beaches and laidback living have long pulled Brits to Spain in their droves. A large English-speaking network makes buying a home in the country considerably easier.


The carnage that was Spain’s housing market following 2007-08 has been well documented. But figures suggest that the market could have bottomed and be on the road to recovery – albeit at a very slow pace.

Separate reports from the Spanish General Council of Notaries and Bank of Spain show that demand from foreign buyers has grown considerably in the first quarter of 2014 compared to 2013.

And thanks to significant price falls over the past few years, there is now the potential to pick up a place in the sun for a very reasonable price.


The Spanish economy remains on shaky ground.  And while pockets of the market have seen a recovery, others are still licking their wounds – particularly the Costas and other regions traditionally popular with Brits. In these regions there are still many homes standing empty.

After a glut of homes were built illegally some reports show that British buyers have been marketed properties that are due to be bulldozed – so extreme care is needed.

[ Spanish government accused of pushing illegal homes to Britons ]

[ ‘Our €250,000 Spanish villa sold for just €87,000’ ]

The British Foreign Office provides detailed advice for British buyers of Spanish property. It recommends contacting the Coastal Demarcation office in your region to get a certificate to certify that the property is not affected by the 1988 Coastal Law if you are thinking about buying a coastal property.

Where would the experts buy?

Sarah Drane has been living in Spain for 12 years and owns her own property PR agency. She tips Ibiza as a good spot to buy now.

“Homes are changing hands fast, often with more than one party fighting over the same property, and rental incomes can be borderline ridiculous…  Ibiza looks like a safe bet for property investment to me,” she commented.

“It’s rapidly overtaking the South of France for cuisine, ambience and cool factor. Ibiza now has the most expensive restaurant in the world at €1,500 a head, the multi-Michelin-starred Adria brothers of elBulli fame are opening a restaurant next year, the Gumball 3000 Rally passed through in June and the Port of Ibiza is embarking on an €8million facelift.

“For rather more shallow pockets, it’s still possible to pick up a two bedroom terraced villa on the Costa Calida, on a golf course, within 15 minutes of Blue Flag beaches, for less than €50,000.”

[ In pictures: The beautiful villas of the Balearics ]


Praia De Luz, Portugal £771,000 (Fine & Country)Praia De Luz, Portugal £771,000 (Fine & Country)

After Spain and France, Portugal is currently the most popular destination for Brits buying on the continent, according to Conti.


Prices in Portugal took a hit during the depth of the financial crisis, but numerous reports show that the market is recovering well.

“One of the things that marked the Portugal property market out from a number of other European countries is that, instead of carrying on building throughout the economic crisis, they stopped once they had fulfilled their quotas and reached capacity, meaning there is no surplus of unfinished properties in the country,” commented Marina Pasquill, country manager of the Portugal Buying Guide.

Pasquill adds that now could be a good time to buy because new housing starts have slowed.

“After October this year, we predict there won’t be any more of the current new builds available. A lot of the new developments are already sold out, so if buyers don’t take advantage by the end of the summer, they will have to wait until the new builds go up, or buy off-plan.”

The government has also improved incentives for overseas buyers offering so-called golden visas to buyers who spend over a set threshold.

Meanwhile, Fine and Country has recently opened two new branches in the Algarve areas of Carvoeiro and Praia de Luz –  a sure sign of marked confidence. The agency has reported an increase of buyers from non-traditional areas, such as India and South Africa.


In May the Royal Institute of Charted Surveyors (RICS) reported that prices across the country are not far from stabilising but still urged caution on the market and against putting too much weight on headline figures.

It points out that prices in many areas, including Porto, are still falling and only the Algarve is seeing outright increases – and even this area remains volatile.

Ricardo Guimaraes, from real estate company CI, says: “The challenge for the market is to consolidate the potential stabilisation which is now being observed by agents. They report an increasing demand from potential buyers, especially in markets that benefit from seasonal activity, such as the Algarve. For the other markets, the eventual additional fiscal pressure on families’ income is identified as a risk.”

Where would the experts buy?

Marina Pasquill picks out Villamoura where work to build a beautiful new freshwater marina starts in 2015.

She comments: “If you are seeking good future returns and a long-term investment, Villamoura and the surrounding areas are ideal, making the most of the new properties, restaurants, bars and local hub that will come as part of the new marina complex.”

She adds that Lagos is a good area for rental investment, with a range of attractions, both old and new.


Puglia, Italy £39,000 (Gentile Giuseppe Antonio i/c Zoopla)Puglia, Italy £39,000 (Gentile Giuseppe Antonio i/c Zoopla)

The romance, the food, the history and the weather – Italy has it all and Brits continue to delight in what’s on offer.


Tourism remains strong, according to Dawn Cavanagh-Hobbs, founder of fractional ownership company Appassionata. “In times of economic uncertainty and increased competition, tourist flows from all over the world have helped to bolster the economy and strengthen our property industry,” she said.

“The property market is overall looking depressed but this opens up opportunities for savvy buyers”, according to Paul Belcher, managing director of agency Ultissimo Ltd.

“Bargains can be found by buyers prepared to upgrade an older property, or by buying well in the high quality destinations.  Either of these routes offer the best option for the typical international buyer who wants to be sure that their capital is secure because values are unlikely to fall,” he added.


With unemployment running high and heavily indebted economy, house prices across the country could have further to fall. Prices have falled by around 30% since 2009 and few see much of an increase on the horizon.

Where would the experts buy?

“There are a number of locations that have eternal international appeal, where the supply of lovely properties is limited and the demand globally for a ‘slice of that part of Italy’ remains strong with robust prices,” said Paul Belcher of Ultissimo Ltd.

“Key among these are Lakes Como and Maggiore, coastal destinations in Tuscany (Forte dei Marmi and Cinque Terra for example), sparkling rural properties in Tuscany and Umbria, and beautiful city-centre apartments in the historic centres of Rome, Milan and Florence or on the Grand Canal in Venice.”

Rupert Fawcett, head of Knight Frank’s Italian department, said: “Liguria is becoming increasingly popular with international buyers. The recession meant that buyers retreated from newer regions of the country like Marche and Puglia which offer better value, and I think we will see these areas becoming popular again over the next few years.

“I would advocate that Tuscany remains one of the better long term investments in terms of holding its value. Tuscany offers excellent air, rail and road access, rolling countryside, beaches and the cream of renaissance architecture.”

Before taking the plunge…

Get independent legal advice – this can’t be stressed enough.  From checking through the terms of the contract to helping you make a will in the country where your property is located (a prerequisite for buying a house in many countries), impartial and knowledgeable advice is imperative.

“The overseas property market is largely unregulated, so be clear about your objectives and maintain the same standards as you would if you were buying any other asset, including British property,” said Jordan Tilley, managing director at UKForex.

“A British solicitor will of course share your language and will likely be covered by professional indemnity insurance, while a local advocate may have more extensive local knowledge – in either case, the Law Society can supply you with reliable contacts.”

[ House prices: countries with the cheapest and most expensive property markets ]

[ A look inside the new Battersea apartments ]

[ Pictures: The most expensive cities to live in the world ]


Fit for a star: Cannes’ stunning homes

Forget the film festival. If you really want to see some glamour, just take a look at the homes that Cannes has to offer.This exclusive enclave on the French Riviera, is a favourite with the world’s wealthiest property buyers from Europe, North America and more recently the Middle East and Russia.


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