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Europe booms as US approaches bust

29th November 2006 | back to article listings BACK    print this article PRINT

While European property continues to grow in value at a slow and steady rate in the third quarter of 2006, the housing market in the US continued its downturn, a trend that experts are predicting will continue into next year.

The Knight Frank Global Property Price Index showed that property prices continued to climb at a strong rate over the last three months; prices in Spain were up 9.7 per cent annual, France saw its homes gain 8.9 per cent over the last 12 months and houses in Greece were up 10.5 per cent.

Ireland was also a big winner, seeing its prices rise 15 per cent annual, up from 11.9 per cent at the same time last year.

Overall, European nations dominated the table of best performing nations, with the countries due to accede to the EU also making considerable gains.

Liam Bailey, head of Knight Frank Residential Research, said that countries in central and southern Europe gained from their "strong economic expansion".

He continued: "The appetite for second homes, whether for personal use or for investment reasons, continues unabated, facilitated by ever increasing accessibility via new low cost air routes and the growth in supply of residential properties in both the mass and luxury sectors."

However, the news is not so positive on the other side of the pond. Property investment experts Assetz believe that the US market, which has seen its growth halved in the last 12 months, has not yet seen the bottom of its downward curve.

Stuart Law, managing director of Assetz warned: "The message to those hoping to invest in the States is hold off - there is further to go before the market stabilises and offers the prime opportunity to investors."

"It is not yet clear how severe the downturn in the economy and the currency will be, so investors should avoid being tempted by current high profile advertising and marketing on US property."

Mr Law advises investors to focus on US homes' letting potential.

The rental market could benefit from any house price collapse and if the value of the dollar continues to tumble as expected, international tourism will soar, providing great stability and demand for rentals," he explained.

But it is not all doom and gloom in the long-term. The continuing slide of the dollar against the pound means that more buying opportunities will arise in the next 12 months.

New build prices were down ten per cent year on year in October and these could fall even further as the pound approaches the $2 mark, providing investors with cheap homes for purchase.

Assetz® is a UK Property Investment Specialist. Please visit our property sites shown below.

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