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European property prices 'could see 10% fall'

18th November 2005 | back to article listings BACK    print this article PRINT

Many areas of Europe which are popular with investors and second home buyers could see prices fall for the first time in years, according to overseas property specialists Tribune Properties.

The Spanish ministry of housing claimed last month that the current rise in property prices was beginning to slow down. An average increase of 13.4 per cent through 2005 is the lowest rise for three years, and Tribune are saying that falling demand could force some home sellers on the continent to lower their prices to attract buyers who have been looking elsewhere.

Falls of up to ten per cent are predicted by the agency in response to the emergence of new European markets in the former Eastern Bloc. Recent years have seen British, Dutch, Belgian and German tourists, investors and buyers head for countries like Bulgaria where apartments and houses can be bought at a fraction of the price of traditional destinations Spain and Portugal.

But a love for the traditional holiday in Spain or France, plus easy connections to top destinations with the growth of budget airlines and the ease of driving direct to many areas has left many analysts saying that the newer countries on the property scene won't make a huge dent in the market. A survey out this week revealed Spain to be the most popular destination for those seeking to invest in another property.

But Tribune's Roger Munns says that the threat nevertheless is bringing steep prices down to more affordable levels for potential investors: "Second home buyers are seeing properties offered in Bulgaria at less than half the price they thought they would need to own a home overseas, and the traditional markets of Spain and Portugal are losing out," he says.

"Already we have seen villas in Menorca drop in value by around ten per cent, and they could, and probably will, go lower still. In addition the rate of new builds on the Costa del Sol and Costa Blanca hasn’t slowed down to any great degree, and before long there could be a price correction as there is going to be quite an oversupply in the market."

The number of Brits buying property abroad is set to spiral to 4.4 million – double its current levels – according to a survey out earlier this week, a trend which could be further exacerbated by lower prices. Five per cent of us already have a place in the sun. The survey also found that some 37 per cent of respondents are considering buying a holiday home, with Spain by far the most popular choice for the ideal getaway.

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