Assetz® News - European property investment remains attractive

European property investment remains attractive

13th January 2006 |

In a speech on the global macroeconomic outlook, Standard & Poor's chief European economist Jean-Michel Six has suggested that property investors have genuine cause for optimism in the coming year.

For those investing within the UK, a more secure housing market is likely to bring about a "bounce back" in the economy, according to Mr Six. This backs up claims earlier this week from the National Association of Estate Agents (NAEA) that the property market appears to be "back on track" having endured a difficult period in the early parts of 2005.

Mr Six's assessment also adds to the general consensus that the property market has successfully manoeuvred away from a potential crash, while many experts are looking forward to house prices rising between three and five per cent before the end of the year.

This rise is likely to gain momentum if Mr Six's prediction of cuts to interest rates proves accurate. Despite rates remaining constant yesterday, many experts believe that the Bank of England will be prepared to introduce another cut before long. Part of the reason for the current stability, however, is that the housing market is demonstrating increasing signs of activity.

Pointing to a pick up in corporate investment in Germany as well as the expected VAT hike for 2007, Mr Six also suggested that consumer demand was likely to soar in the country this year. A similar trend was predicted for France, with demand for durable goods in particular likely to rise.

This can only benefit the already healthy housing market in France, with the French National Association of Estate Agents (FNAIM) revealing that property prices increased by 10.3 per cent across the nation in 2005.

According to thisfrenchlife.com, apartment prices rose by 10.6 per cent in 2005, while the price of a house has risen by 9.9 per cent. Although both figures are lower than those for 2004, the FNAIM has been pleasantly surprised by the fact that there was an increase in the number of properties passing through agents' books.

The biggest price increases were seen in Auvergne, Basse-Normandie, le Centre, Champagne-Ardenne, Franche-Comté, Haute-Normandie, Languedoc-Roussillon and in Lorraine. The north and east continued to see prices rising, with a 10.3 per cent increase comparing to ten per cent in 2004.

Recent figures from Sociedad de Tasacion showed that Spain's remarkable property boom is continuing with a 10.1 per cent increase in house prices in the country's provincial capitals last year. Mr Six has backed this evidence by suggesting that he is expecting Spain to enjoy "healthy growth" throughout 2006. Saying that the Spanish housing market has been "red hot" for many years, Mr Six reiterated that it is "certainly a market to watch".

Property investment worldwide appears to be in an encouragingly strong position at the moment and Mr Six has echoed a recent report in the Times by referring to a "soft landing" for the housing markets of both Europe and America.

With fears of a serious downturn for the UK property market now alleviated, Mr Six anticipates that property investors are facing "a very positive scenario".