Global House Price Crash Effect On Eastern Europe

[MattLG]

I'm fairly new to this board but I haven't been able to find a thread that explicitly discusses this topic.

I had been under the assumption until recently that only the UK and a small number of other countries were experiencing a house price boom and thought other countries were just moderately rising. I now realise that there is a global house price boom that is more than likely going to crash along with the UK market. What effect do you guys think this will have on the Eastern European housing markets? As these are increasing due to EU accession and better economy management and not just the usual market forces are these likely to fair better than the UK market?

I'm refusing to invest in the UK market at the moment and waiting for the crash. I was going to invest in Bulgaria, the Czech Republic or Croatia instead, but now I'm starting to think that these could be just as risky.

MattLG

[penbat1]

Personally i would just look upon Eastern Europe as a nice cheap place to live and forget about the investment opportunities. Opinions are mixed about future price rises. Bulgaria on the Black Sea may have already been overhyped.

[brad]

I think that various countries are going to be affected in different ways.

I know a bit more about the Romania property market (I bought a house there recently). It has seen huge increases in property value during the past 10 years, mostly fuelled by money made outside Romania. You can still find bargains (just), but in my view it is no longer a good time to invest if you are looking for a certain quick buck.

It is hard to tell how a slump in the western markets will affect Eastern Europe housing market. The main thing to bear in mind though is that some of these countries still need a lot of investment, so the housing market included is nowhere near saturation - I think that this factor alone makes those eastern markets less influenced by the trends in the highly saturated housing markets abroad.

I hope this helps somehow.

[Pole]

You have to bear in mind that in many Eastern European countries houses are priced according to the total cost of materials+the land+labour+ taxes, certificates, etc.. And in many cases people build houses themselves.

This doesn’t apply to big cities where properties are always overrated (worth more than the total cost of the land, bricks and labour, etc).

In some areas, prices follow the statistics of the level of unemployment (high unemp.=low prices).

And my last suggestion – keep in mind that people in EE tend to live in one place for the whole life. They simply don’t like moving without a good reason. So the property market will always be a bit cooler then in Western Europe.

[mustrum_ridcully]

You have to bear in mind that in many Eastern European countries houses are priced according to the total cost of materials+the land+labour+ taxes, certificates, etc.. And in many cases people build houses themselves.

This doesn�t apply to big cities where properties are always overrated (worth more than the total cost of the land, bricks and labour, etc).

In some areas, prices follow the statistics of the level of unemployment (high unemp.=low prices).

And my last suggestion � keep in mind that people in EE tend to live in one place for the whole life. They simply don�t like moving without a good reason. So the property market will always be a bit cooler then in Western Europe.

Very true, thankfully most of mainland Europe seems more level headed about houseprices, unfortunately lots of Brits are not satisfied with screwing-up their own country and want to move on to Eastern Europe - but don't realise things are different on the otherside of the English Channel.

A East European friend (I'm not saying where) told me that buyers from the UK get ripped off there big time as houses effectively have two prices the foriegner prices (that no local would be stupid enough to pay) and the locals price (that a foreigner would never be offered) - and good luck to the Bulgarians I say.

[newbie]

I think EE will drop a bit along with the over-heated markets. Why? Because people/companies from over-heated markets have used equity from their local UK/Irish/Spanish properties to invest in EE. When things turn bad at home and they need cash, they'll be wanting to sell their EE investments first to generate that cash. The increase in supply, coupled with a lack of capital in the local EE markets should send prices down in EE as well. This assumes a largish crash in the older markets.

[Andrew Beale]

Very true, thankfully most of mainland Europe seems more level headed about houseprices, unfortunately lots of Brits are not satisfied with screwing-up their own country and want to move on to Eastern Europe - but don't realise things are different on the otherside of the English Channel.

A East European friend (I'm not saying where) told me that buyers from the UK get ripped off there big time as houses effectively have two prices the foriegner prices (that no local would be stupid enough to pay) and the locals price (that a foreigner would never be offered) - and good luck to the Bulgarians I say.

Very true, but then you will also find that there is a two tier build quality - the bulgarian (that no foreigner should be stupid enough to buy) and that built for a foreign buyer (that are built by the same Bulgarian builders to a very much higher spec). I dealt with an off plan development last year in Bulgaria where over 80% of the sales were to Bulgarian second home owners, including the Bulgarian director of an international property consultants based in London, were they all being ripped off?