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Euro rate hike hurts those with overseas property

[ Posted April 20th, 2011 ]

Those who own buy to let mortgage rates that are attached overseas were hurt in terms of their property investments after the first hike in the European interest rate occurred in July of 2008. With the mortgage rates continually rising throughout Europe and the currency becoming overvalued and inflated against the dollar and the pound the investments are no longer proving to be as viable as they may have looked two years ago before the world wide global recession fully set in.

Since the interest rate increase was announced the Euro has gained back some of its strength, but in the face of the pound weakening those in the UK who own properties overseas are now struggling.  Moneycorp senior currency expert Adam Jordan stated that the company has seen about a 40% increase in the amount of people forced to repatriate money back to the UK during the start of 2011 compared to the figures that were reported for the last quarter of last year.  He added that the outlook will most likely get even worse when the ECB (European Central Bank) is forced once again to increase their interest rates to combat inflation.

Jordan explained that although the property market expects to see the an increase in the Bank of England interest rates in October, if this does not occur due to the fact that there has not been a response to the ECB rate increase from the Bank of England then the interest rate gaps will continue to grow between overseas market and the UK.  This in turn will cause heavy strain on those who do not have fixed mortgages abroad as budgets may have to stretch in order to make up for the difference.

The most recent set of figures released from the Smart Currency Exchange demonstrate that after the ECB rate rise the average European mortgage repayment will increase to total around £1,750 per year with the mortgage rates expected to continue to increase by another 1.75%.  Jordan also added that over the last year he has seen many of the company’s clients decide to re-mortgage their main residential home in the UK in an effort to quickly pay off the overseas home mortgage so that they do not have to worry about making Euro payments on any properties.

European Market Drawbacks

[ Posted September 11th, 2010 ]

For many people looking to escape the ups and downs of the property market in the UK they have turned to their neighbours for real estate possibilities, with primary focus on France and what it has to offer. Many novels set in quaint townships where the authors live out of traditional farmhouse villas have further helped to fuel this craze, yet unfortunately for many the ability to live out their dreams in neighbouring lands may still be just that – a dream.

Buoyed by high interest from many UK investors looking at establishing vacation homes abroad many French locations that were once thought to be highly viable for investment are, in fact, maintaining strong market value even in the midst of many other areas falling behind. This has been due in no small part to a large number of local buyers in the UK pushing for overseas mortgages from local lending establishments based upon the continued low interest rate set by the central banks along with the fact international interest in quiet retreats as a whole has risen substantially in recent years.

Prices for small, traditional homes in areas such as Province have been known to skyrocket recently into the range of £415,000 to £1.25 million, dashing the hopes of many investors and even first-time buyers looking to secure a good deal abroad in the process. Should you still wish to purchase abroad, however, it has been reported that not all areas are affected by this price bubble. In fact, just a short drive away from most "ideal locations" (30 minutes on average) sees house prices returning to what is considered to be the market norm under standard conditions, meaning that a number of options are still available for purchase provided you do not mind a small commute.

British owners hungry for Turkey as property prices remain stable

[ Posted July 9th, 2010 ]

According to the latest figures from the Land Registry, a record 32,000 Britons currently own property in Turkey, indicating that Turkey’s real estate sector is still stable and in decent shape.

The Turkish General Directorate of Land Registry states that the demand for Turkish property from foreign buyers is still dynamic and shows no signs of tailing off. In particular, the past couple of years have seen marked interest in second home ownership-particularly along both the Mediterranean and Aegean coastlines-with foreign buyers flocking here to buy double the amount of property than at any other time since the founding of the Republic 79 years hence.

Turkey has especially attracted European buyers as a result of the general affordability of the property prices there, as well as the low cost of living and easy, direct access from Britain.  In Turkey, foreigners now own more than 63 million square metres of property, and British people own the largest amount of all at six million square metres. The Germans are next, owning 3.5 million square metres followed by the Greeks with three million square metres, according to figures from the Turkish Land Registry.

One of the most sought after destinations for buying property is the province of  Mugla in the south western part of the Aegean cost. The province has nearly 5.5 million square metres owned by foreign nationals and this includes around 14,000 British owners.

‘We have certainly seen the Turkish property market go from strength to strength. Overall, the number of foreign property buyers has increased by nearly 30%, from 73,000 in 2008 to 104,000 today with the British market accounting for the largest group of buyers,’ commented Steven Worboys, who is the managing director of Experience International, a firm of Turkish property experts.

The increase in available finances have positively affected the Turkish property market with up to 70% LTV mortgages being commonly available throughout Turkey. Also, Turkey is outside the Eurozone, so there is no currency exposure due to the fact that the majority of property prices are fixed in Pounds Sterling. The latest Turkish price index has also shown that generally, property prices have remained stable.

Overvaluation triggers fears of double dip

[ Posted June 8th, 2010 ]

Despite the fact that, in general, European real estate markets are showing all the signs of putting the recent economic downturn behind them, experts are continuing to warn of the still existing dangers of a double-dip recession.

The housing price slump has certainly slowed in a number of countries, including Italy, France, the Netherlands and Spain, although Ireland remains an exception to this rule, according to a recent  Housing Market report released by Standard & Poor’s.

According to Jean-Michel Six, Standard & Poor’s chief European economist, there are some definite signs of European housing price stability, commenting that there have been numerous signs of price stabilization throughout Europe as a whole. Still, many specific areas are still in danger of faltering – even if they have shown some positive trends as of late according to many experts, with some key countries that have experiences rebounds as of late still potentially in danger of facing a housing market recession once more if things do not remain optimal.

S&P’s report shows that France is leading the way in terms of overvaluation, currently standing 18.5% higher than its long-term average. Germany, by contrast, seems to be undervalued by around 12.5%, perhaps due to the fact that they were largely on the sidelines of the housing boom.

As far as the UK is concerned, the affordability ratio shows a substantial overvaluation that stands at 21%, and the ratings agency has warned that this could result in further price slippage in future, maybe even later this year.

The report further indicates that some areas, with France in particular, potentially facing dire straits in the coming months should things destabilize even somewhat. As an indicator of this mortgage approvals have begun to recede across the country following 2009 highs, a dangerous sign for many market watchers that some locations may not necessarily be as suitable as they may first appear on the surface.

Stabilisation of European property market hints at positive outlook

[ Posted May 25th, 2010 ]

The office rental market is continuing its improvement across Europe as the economies across the continent continue their recovery from the worldwide financial crisis. A new report has shown that business confidence has now seen improvement for the last four consecutive quarters.

Incentives as well as prime rents has reached equilibrium in most markets for the opening quarter of 2010, according to the new report from consultants Jones Lang LaSalle. The company’s European Prime Office Rental Index, which is based upon the weighted performance across twenty-four markets, rose by 1.2% quarter-on-quarter, and this figure represents the first rise since the second quarter in 2008. Despite this, rents for prime offices are still 5.0% below the levels seen last year. Moscow saw the largest rise in rents for the quarter-up 14%-and the City of London also saw a healthy rise in this sector of 6%.  Brussels also saw achieved rents indicating 17% growth, although it is suspected that this figure is largely as a result of one exceptional deal in particular in the city’s Leopold district and was not indicative of the general market, according to the report.

The report, however, also saw a softening in some market-especially Dublin-which saw rents fall 7.6%, Madrid-where rents were down 2.5% and also Budapest with rents down 2.4%. Despite these figures, there has been some stabilisation in the wider market in Dublin.

According to Chris Staveley, a director in the Jones Lang LaSalle EMEA Capital Markets Team, explained that the signs of economic recovery where starting to drip down through to office demand, although tenants are still cautious and cost-sensitive. Looking towards the future Mr Staveley believes that supply dynamic, GPD and employment growth differentials throughout the EMEA area are all factors that will illustrate differences in recovery across the area.

2010 Looking Positive for Euro Property Investors

[ Posted April 1st, 2010 ]

According to a new survey undertaken by the international real estate consultants, CB Richard Ellis Group, investors now see Europe as a prime prospect for future real estate investment during the coming year, with Asia also viewed as providing decent opportunities. The poll also indicated that globally around 60% of investors viewed Europe as the top target for real estate investment, with the majority of the remainder of respondents stating that Asia is their preferred target.

According to Nick Axford, head of EMEA research and consulting at CB Richard Ellis, the general preference for the European market is unsurprising given that the majority of those questioned are either based in or mainly invest in the region. He stated, however, that it was notable that around 40% of respondents saw the best property investments lying elsewhere – particularly in Asia. He went on to say that the UK has unquestionably led the recovering of property prices across Europe during the past six months, and the UK market continues to attract a large amount of investor interest.

Mr Axford’s colleague, Jonathon Hull, agreed with the assessment, adding that the UK market remains very attractive to investors who are still largely averse to risk due to current market conditions as a result of its general transparency and liquidity, along with the weakness of sterling. He added that prime location coming onto the market in the UK attract very strong interest – especially from investors looking to purchase from overseas. He went on to say, however, that investors are still concerned by tenant reliability and lease length. He also stated that, as liquidity risk remains a primary concern, France and Germany remain most attractive to more than one-third of respondents due to the relative size of their property markets and their relative recovery prospects as well as favourable mortgage rates for various purchases on even buy-to-let mortgages.

There also appears to be a much greater capital flow to the large cities outside of London which is squeezing pricing at the top-end of the housing market. Market analysts have been particularly surprised by the amount of focus on the real estate markets of central east Europe which have seen very low transaction volumes over the last year and a half. Around 50% of those questioned thought that the first half of 2010 presented the best chance of buying prime properties, whilst the majority of those that remained stated that they would prefer to delay buying until the second half of 2010.

Spanish Banks Needing Big Housing Cuts in 2010

[ Posted December 25th, 2009 ]

According to many reports banks in Spain, now the largest holders of real estate property due to numerous foreclosures, will need to offer discounts of up to 50% on property values in order to turn some of their property over and back to the general public. In order to curb the current trend this is expected to happen in early to mid next year, which could mean a great opportunity for many people.

For those of you who haven’t kept up on the European property market over the past few months many lots and residencies have become available as of late due to foreclosures by the government and seized by banks across the continent due to economic hardships that have hit Europe particularly hard compared to other areas of the world. The difficulties caused by the economic downturn may have affected different areas in different ways, however now as the primary business sectors are beginning to recover the real estate market is just getting hit with the full-force of the effects due to the delayed reaction real estate sectors face in these sorts of situations.

While this has caused many people to lose their homes after long battles with banking establishments to keep their residency at the same time it is an excellent opportunity for many others to gain valuable property of their own that may not have been available otherwise as the banks are are forced to make a move in order to prevent the current return in some economic strength that has been building recently from stagnating and causing the recession to drag on even longer in 2010 due to their excessive holding of valuable real estate that is netting them no positive value or benefiting their local area.

The anticipated discounts are not unique to Spain, nor would they be uncalled for given the recent trends. Though they most likely won’t occur in the coming month anticipate first or second quarter 2010 to show some attractive deals coming out of Spain that you should keep your eyes peeled for if you’re interested in any continental real estate, and given the desire to push the properties out back to investors you can most likely find excellent deals on fixed mortgages for the home purchases or even possible attractive remortgage deals for your current home should you already be a homeowner that would allow you to purchase a foreclosed home easily.

Home owners better off?

[ Posted December 15th, 2009 ]

According to a recent report from the Bank of England, some home owners are now up to £200 a month better off in relation to their mortgage payments. The study was conducted on 2000 people with overall savings shown to average out at around £130 with a quarter up to £200.

The reasons for this may be in-part because of recent influx of money to support home owners has been paid into the market in the form of a policy known as ‘quantative easing’ which essentially translates to a direct injection of liquidity into the money markets to enable a greater flow of lending and spending power which, in turn, drives the economy forward.
It has led to more money being available for lenders; this enables them to offer lower mortgage rates than they would otherwise be able to in the current fiscal crisis, which is a boon for those individuals currently on variable rate or tracker mortgages.

The situation is also helped by the record low interest rate of 0.5% set by the bank of England to control inflation. The Libor index, which controls variable rate mortgage lending rates, is also down to around 0.6 percent.

While this is good news for those on variable rate mortgages it isn’t for those on a fixed rate, who may be paying rates of up to 4-5%.While fixed rate mortgage rates have also been lowered to about 3.5% recently that isn’t much help for those who signed a deal before this lowering. Depending upon deals that signed.

However while this report is positive for many, one should look at the continuing habits of the banks to only loan to those with perfect credit and able to put down hefty deposits, this obviously allows lower rates and therefore lower payments so the truth of the matter may not be that the majority of households are truly saving money, it is just those that are paying are those who have the financial flexibility to push down prices.

Two Bedroom Flat Labelled the Cheapest in Britain

[ Posted October 25th, 2009 ]

Needing up to £10,000 of  work  "refurbishing" , a two bedroom flat, has been labelled „the best bargains on the market at present”.

The flat has an open-plan lounge and kitchen and is situated above a group of shops located in the heart of Catchgate, Stanley.

Left to a woman in a divorce settlement, who realised it belonged to her after she began receiving council tax bills and other official letters, the property i son the market for £1,000.

With walls covered in a film of water and cables hanging from overhead beams, the flat has the windows covered with chipboard, but it has no water or electricity Rubble litters the floor, the walls have huge holes and the ceilings have crumbled leaving a corrugated iron roof to protect the rooms from wind and rain.

"As far as we are aware, this is the cheapest permanent residential property which has ever gone to auction in the UK," said an estate agent at the Whickham branch of Sarah Mains.

"This is a real opportunity to snap up an investment that could reap rewards in a short spell of time. While it needs refurbishing, we have been advised by qualified developers it would only take a further investment of £8- 10,000 to get this property in tip-top condition, suitable to have as a home or to let out."

The auction will occur on November 5 at the Gateshead Marriott Hotel.

The purchaser on the day must bring a 10 per cent deposit and this is also a surprise.

 Sarah Mains aded:"A starting price of just £1,000 is something that in the two years we have been holding auctions we have never encountered before. But the owner is, for personal reasons, just keen to sell and is happy to take the risk at starting the bidding so low.”

Reluctant landlords in spanish property

[ Posted October 23rd, 2009 ]

Due to the country’s depressed real estate market, the number of property owners in Spain who are renting out their properties because they cannot sell are increasingly

It is claimed the number of bad tenants hit by the economic downturn is increasing at alarming rates in the past two years,.

Many of them who are having problems are expats who moved to Spain for a better lifestyle and then became reluctant landlords because of the credit crisis

Lots of  expat landlords are unaware of the different mechanisms in place to secure rental income and often fail to implement them in their rental agreements which can leave them unprotected if the tenant does not, or cannot, pay the rent.

Bryn Cole, Managing Director of Paragon Advance España said that many of these reluctant landlords have moved back to the UK and rented out their properties as they cannot sell them in the current real estate climate.

‘They have been forced into letting out their homes in order to be able to pay the mortgage and, for those investors who jumped on the Spanish property market, buying off plan, only to see it go into freefall before they could offload their investment, they have had their fingers burned and are having to let long term and ride it out,’ he explained.

 In order to assist ex pat landlords, Paragon Advance España offer a rent protection and legal expenses warranty which offers a standard loss of rent cover for up to €2000 per month for up to six months cover, although rents of over €2000 can also be covered, and legal expenses cover up to €15,000.

They have invested time and effort in ensuring that a more specialised system of arbitration takes root in society, providing fluidity, security and trust in contractual relationships between landlords and tenants
By using the route of arbitration, the timescales involved are dramatically reduced. It can take around 18 months through the usual law system and, in the meantime, the landlord still has to pay the mortgage, utility bills and has no redress over the defaulting tenant during this time. If the landlord should refuse to pay and, for instance, the electricity is cut off, the tenant can prosecute the landlord.

During this time, the average dispute resolution took less than four months. With the system created by AEADE to facilitate disputes in that sector, the time frame was limited to an average of 25 days. aims to provide every client with cheap, affordable and best mortgage loans in the UK market, however the actual mortgage rate available will depend on client's financial circumstances and credit history. Although, has made every effort to ensure that the mortgage rates listed are correct, it bears no responsibility in case of an error. 
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