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Second Homes Face Price Fall

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The most important bit about that is it's position - lead story.

The most common motive of buyers is to make a profit – rather than to have somewhere to go on holiday – according to a survey by the company. This speculation might have made some markets even more precarious. Some buyers might have overestimated the potential rental returns that they can get through letting these properties.

Yup.

http://www.ft.com/cms/s/0/f29aeeb8-6de8-11...00779fd2ac.html

They're still pulling the punch though. It's all foreign homes, foreign developers.

The media still won't admit it's happening here.

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The most important bit about that is it's position - lead story.

The most common motive of buyers is to make a profit – rather than to have somewhere to go on holiday – according to a survey by the company. This speculation might have made some markets even more precarious. Some buyers might have overestimated the potential rental returns that they can get through letting these properties.

Yup.

http://www.ft.com/cms/s/0/f29aeeb8-6de8-11...00779fd2ac.html

They're still pulling the punch though. It's all foreign homes, foreign developers.

The media still won't admit it's happening here.

The price of second homes in the Mediterranean and eastern Europe could fall as a result of the credit crisis, a leading property expert has warned.

Michael Ball, a professor of property at Reading ­University, England, and an adviser to the UK government, said holiday homes in many parts of Europe were exposed to a correction.

...does it need a professor to tell us this ...give us all a break ...this is just plain common sense.... :lol::lol::lol::P

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...the VI's are trying to float 'a duck already dead in the water'..... :lol::lol::lol::lol::P

Just had a look down the replies list @ about 12.50 South Lorne and I know a few beers might loosen your inhibitions but ... whey good going. :rolleyes::rolleyes:

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The likes of spain, cyprus, et al. that are heavily dependent upon UK buyers will bound to see a fall. Probably around 10-15 over the next 2-3 years.

The only place to buy abroad is places with a local market that are booming such as the eastern europe capitals.

Ski & snow resorts are fuked.

Edited by ringledman

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The likes of spain, cyprus, et al. that are heavily dependent upon UK buyers will bound to see a fall. Probably around 10-15 over the next 2-3 years.

The only place to buy abroad is places with a local market that are booming such as the eastern europe capitals.

Ski & snow resorts are fuked.

Eastern European housing markets aren't booming because of locals.

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Im thinking of a new series. I dont know what to call it though, maybe 'a place in the sun' where pasty brits chase the dream of sun, sea and sangria in the hotter spots of Europe. We can buy properties and then flog them to other brits because prices only ever go up.

What do you think? A good idea or what!

--------------------------------

http://www.ft.com/cms/s/0/f29aeeb8-6de8-11...00779fd2ac.html

Second homes face price fall

By Jim Pickard in London and Mark Mulligan in Madrid

Published: September 28 2007 18:41 | Last updated: September 28 2007 18:41

The price of second homes in the Mediterranean and eastern Europe could fall as a result of the credit crisis, a leading property expert has warned.

Michael Ball, a professor of property at Reading ­University, England, and an adviser to the UK government, said holiday homes in many parts of Europe were exposed to a correction.

Not only had prices risen fast amid speculative interest and the easy availability of credit, but the supply of new flats had been increasing at a prolific rate.

Prof Ball pinpointed the Mediterranean and central and eastern Europe as being particularly “vulnerable” to falling prices.

“There are a variety of reasons in that in both of those areas, credit has been used and people have been very optimistic about long term values,” he told an audience of property professionals on Thursday night.

“There has been a boom, the market has been driven by foreign investors and now that is beginning to turn.”

The professor cited, as an example, Estonia, where house prices had dropped by an estimated 10 per cent in the past 12 months. “That will probably trickle through to other countries,” he said.

Savills, the estate agency, says the value of British-owned homes overseas have risen from £7bn in 1994 to £52bn ($106bn, €75bn) today through new purchases and rising prices.

The most common motive of buyers is to make a profit – rather than to have somewhere to go on holiday – according to a survey by the company. This speculation might have made some markets even more precarious. Some buyers might have overestimated the potential rental returns that they can get through letting these properties.

Prof Ball said many such markets were “risky” because there was no history of what fundamental values should be.

Ian Marcus, head of European real estate at Credit Suisse, said he believed there was “a large over-supply” of holiday homes in many European resorts.

The warnings come amid widespread price falls in the second home markets of Florida with some resorts seeing double-digit drops in the past year. The number of home sales in Florida dropped 43 per cent between the first and second quarter.

In Spain, demand for second homes on the Mediterranean coast has been softening for two years, according to estate agents. Many have reported a virtual standstill since May after a series of corruption scandals and a collapse in property­related shares.

At least one mid-sized developer – Llanera – faces bankruptcy. One central bank official in Madrid said: “There is growing evidence that smaller real estate companies and house-builders who launched projects late in the cycle may have problems.”

Copyright The Financial Times Limited 2007

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I have felt that this was the very weak link in the UK property market. People being squeezed by higher mortgage rates are most likley to sell the second home, holiday home, BTL for whatever they can get to release cash. People will be prepared to sell second homes, holiday homes, and BTL at just a breakeven on the original purchase price (or even a small loss) long before they will agree to sell their main home.

This article is mainly about overseas holiday homes but people being forced into selling holiday homes and BTL in the UK will dump a lot of spare property on the market. The so called 'housing shortage' will disappear overnight.

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This article is mainly about overseas holiday homes but people being forced into selling holiday homes and BTL in the UK will dump a lot of spare property on the market. The so called 'housing shortage' will disappear overnight.

The same thing happened during the 80's boom, many Brits bought second homes in Spain and France. Of course when the bust arrived they had to dump their holiday properties.

The housing shortage is a long-term structural problem in the UK, it existed during the 90's bust, and it exists during the noughties boom.

It doesn't explain why prices have risen, but it does provide an excuse for people who don't understand economics.

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Michael Ball, a professor of property at Reading ­University, England, and an adviser to the UK government, said holiday homes in many parts of Europe were exposed to a correction.

What he should have said was.

Holiday homes in many parts of Europe have already seen a correction, sell now before the chicken of despair comes home to roost.

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Eastern European housing markets aren't booming because of locals.

I disagree.

I do as lot of business in Eastern Europe. Romania in particular. Their economy is surging ahead, it's the fastest growing economy in Europe. Don't under-estimate effect of the locals. Everyone there wants a new apartment, a new car, a new tv etc. Prices are rising in all regions not just the western touristy places.

I think new build / off-plan / Sunny Beach type investments will lose money as they are associated with a bubble of western money, but the sure-and-steady growth of normal residential property should be fine and is attributable to regular people (locals).

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I disagree.

I do as lot of business in Eastern Europe. Romania in particular. Their economy is surging ahead, it's the fastest growing economy in Europe. Don't under-estimate effect of the locals. Everyone there wants a new apartment, a new car, a new tv etc. Prices are rising in all regions not just the western touristy places.

I think new build / off-plan / Sunny Beach type investments will lose money as they are associated with a bubble of western money, but the sure-and-steady growth of normal residential property should be fine and is attributable to regular people (locals).

But th elocals are begining to realise the error of large borrowings very quickly . People in Czech for example are much more cautious about spending. Ye sthere has been alot of development but now there is a glut particularly in Prague driven by Overseas speculators.

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The most important bit about that is it's position - lead story.

The most common motive of buyers is to make a profit – rather than to have somewhere to go on holiday – according to a survey by the company. This speculation might have made some markets even more precarious. Some buyers might have overestimated the potential rental returns that they can get through letting these properties.

Yup.

http://www.ft.com/cms/s/0/f29aeeb8-6de8-11...00779fd2ac.html

They're still pulling the punch though. It's all foreign homes, foreign developers.

The media still won't admit it's happening here.

I expect to See Jose Carrarras of Polaris World (Murcia) on the screens soon

'I give you fair price for your property - no less than 50% of what I sold it you 12 months ago' :lol:

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I disagree.

I do as lot of business in Eastern Europe. Romania in particular. Their economy is surging ahead, it's the fastest growing economy in Europe. Don't under-estimate effect of the locals. Everyone there wants a new apartment, a new car, a new tv etc. Prices are rising in all regions not just the western touristy places.

I think new build / off-plan / Sunny Beach type investments will lose money as they are associated with a bubble of western money, but the sure-and-steady growth of normal residential property should be fine and is attributable to regular people (locals).

Intereesting, thank you for the insight.

It seems the property herd instinct is not just confimed to the English-speaking countries. Other people can be just as stupid.

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Intereesting, thank you for the insight.

It seems the property herd instinct is not just confimed to the English-speaking countries. Other people can be just as stupid.

Interestingly, Romania has reasonably high inflation (hovering around 7%) which means wages go up, which means prices go up which means wages go up etc. Standard economic theory.

This means that prices of property go up (let's say 10%) due to normal background growth rather than a UK-style bubble. In the UK, (official) CPI and wages are around 2-3% yet houses go up 20%. This is a bubble. In Romania, a 10% increase in prices (with 7% wages and CPI) doesn't seem such a bubble.

Also note that in Romania, very few people have mortgages, usually, they work abroad, save, and then buy outright with cash. There is not the ease of credit that we have had here - classic credit bubble.

It's a completely different mentality there. I like the place.

I don't really know the point I am making, other than saying they have good steady growth, rather than a borrowed-money bubble.

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