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Double Pricing On Foreign Property?

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Which countries in the EU tend to charge foreigners a higher price for new proprties than ther local market will pay?

Is this common and is this legal within the EU?

Anyone had any experience of this?

The reason I ask is that I've been out to view some off-plan property in Budapest and the developers and agents tend to advertise in Euros. No problem there but on returning I did a bit more research and found the Hungarian websites for the same developments advertising in the local currency at some 25% cheaper!

Fair enough you expect some currency fluctuation but there hasnt been anywhere near that amount between the two currencies recently.

My concern is that if you buy on a mortgage your property could be valued at the lower 'local rate' and then you would have to find the shortfall.

Can anyone expand on this with their experience abroad?

Cheers.

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All! Always have always will. As Markets develop its gets worse. From France, Spain and now Bulgaria and Romania. They say beware of Salesmen bearing gifts. In a new 'developing' market it’s hard to benchmark both the 'market rate' for and the costs associated with the 'purchase and ownership' of property in that country. As the market develops and therefore sucks in 'new mugs in the form of El-Gringo Anglo Saxon' the secondary market i.e. the market to 'rich' foreigners set its own bench marks which are disconnected from the local/real market.

In any case in the Off-Plan new build aimed at Foreigners market, the disconnect is probably at its greatest.

Florida (obviously not EU) is a mature markets where Brits buy off plan. New mugs would say in a self congratulatory smug way:

“I’ve bought a phase 1 villa, 12 months ago for $300k. Phase 2 is being advertised for $340k, I’ve made $40k, aren’t I smart?”

The fact is the people paying $340k are fresh new mugs, off the plane and they are in a ‘process’, which has been perfected over 200 years to extract maximum $ out of the unsuspecting.

In reality the 12 month old ‘second hand villa’ will only sell at a 10% lower price than that of the new build phase 2 villas.

$340 – 10% = $306k, ah well, they’ve still made $6k profit? Yes, well no!

When you add the none recoverable costs of purchase at circa $12k and the none recoverable costs of selling at circa $23k. The disconnect between what the new mug thinks he’s made, + 40k and his real position which is a loss of $35k is substantial.

The trouble with the emerging new markets in Europe is that over the next 2 to 5 years they are going to be competing against virtually free apartments/villas in Spain.

A combination of over building, naïve buyers borrowing too much money to pay too higer price and rising global interest rates topped by oil at historically highs, Spain will provide a source of below cost properties for the foreseeable future. In Spain forget entering the disconnected ‘processes of off plan new build’. You can walk into any EA office and negotiate 30% discounts off the prices (of second hand) and were only at the beginning of the buyers market.

So you need to factor in the ‘risk premium’ of buying property in emerging European countries, having first considered all the factors.

Just my opinion of course

Pablo Silver or Lead?

Edited by Pablo-silver or lead?

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In Spain forget entering the disconnected ‘processes of off plan new build’. You can walk into any EA office and negotiate 30% discounts off the prices (of second hand) and were only at the beginning of the buyers market.

Really? Any EA? 30% off houses for the asking? In Spain?

Why resort to such obvious hyperbole - it simply weakens and casts doubt on the rest of your post.

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Cyprus pretty much the same.

You can even see price differences between newspaper classifieds.

I was monitoring some property for sale in The Cyprus Weekly, which is printed in English, and found same advertised cheaper Greek newspapers !!!

Anything advertised in English here carries a price surcharge

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Which countries in the EU tend to charge foreigners a higher price for new proprties than ther local market will pay?

Is this common and is this legal within the EU?

Anyone had any experience of this?

The reason I ask is that I've been out to view some off-plan property in Budapest and the developers and agents tend to advertise in Euros. No problem there but on returning I did a bit more research and found the Hungarian websites for the same developments advertising in the local currency at some 25% cheaper!

Fair enough you expect some currency fluctuation but there hasnt been anywhere near that amount between the two currencies recently.

My concern is that if you buy on a mortgage your property could be valued at the lower 'local rate' and then you would have to find the shortfall.

Can anyone expand on this with their experience abroad?

Cheers.

I've been investigating property in Poland and haven't found any difference between properties advertised on English versus Polish websites.

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cocacolalight

I have a friend who trades as opposed to invests in the Spanish property market (or did until the market turned), there's no need for hyperbole, its desperate.

http://www.surinenglish.com/noticias.php?Noticia=8239

As i say many good Spanish properties will soon be able to be picked up at pence on the pound. Its just the market shaking out the 'loads a money dreamers'.

Pablo Silver or Lead?

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Cheers Pablo.

I'm new to looking into foreign proerty but f*** me they are marking these properties up by some 20-30%!

Say theres 10% growth per annum then it could take you 5years just to make it up to the local rate of now! I'd rather put my deposit onto paying off part of my UK mortgage. At least you know what you get.

On another point, do you reckon then that there will be some good bargains to be had in Spain in say 2-3 years?

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Pabo, the hyperbole comes from you taking one EA saying SOME properties are down by 30% and then saying you can walk into any EA and demand 30% off resale properties. It's just not happening.

I wish it was and think the market here will fall big style, but with borrowing costing effectively nothing (inflation cancelled out interest) it won't affect the entire Spanish market as badly as the expat costas market. That said there are still cranes everywhere and brits arriving daily!

Edited by cocacolalight

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In a strange way, I believe you could easily be led into paying a premium in Australia too.

I have been looking into property investment in Australia, and the rule is that foreign nationals can only buy new, unoccupied property, and this requires Government permission. And developers may only sell up to 50% of the units they are building to foreign nationals. The rest have to be sold to the resident population.

Foreigners, especially from the US, UK and Singapore are hungry to buy into Australia, because prices there are still quite a bit lower than in their home countries. But foreigners can only buy off the plan, or new finished units where the 50% limit has not been reached.

This seems to be distorting the market, because developers seem well aware of this and seemingly aim to sell 50% of the units at the inflated price and hope for the best with the remainder. As far as I can tell the premium caused by this distortion in Brisbane is in the order of 25-40% for off the plan development.

There may be other factors involved for example, commentators have referred to:-

  • Land prices currently high
  • Construction costs currently high
  • An expectation that by the time the development is finished the resale value will have increased
  • A higher rental can be achieved for a new unit
  • There are lower maintenance costs on a new unit

However, my personal view is that the dominent factor is the interest from foreign purchasers, because the future of the property market in Australia is currently very uncertain.

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I am looking at apartments in Lithuania.

There you can see the selling prices of unsold apartments on their website. I also located the local land registry site and can see the prices props being sold for.

Looks all very open.

Developers just as happy to sell to overseas buyers and arrange BTL mortgages as local ones and local banks.

Not that there are many finished flats that are unsold. Very very few in fact and certainly not in the popular 55m2 price range. In fact most of those are sold very early off plan to locals.

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  • 301 Brexit, House prices and Summer 2020

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      • down 5% +
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