There has been the gentle wind of change in the eurozone property market, evident in January and strengthening through spring and early summer, moving slowly from a sellers’ market to a buyers’ market. The rise is property prices that followed the release from the Covid restrictions, fulfilling an understandable pent up demand, was enhanced by so many people who decided the restrictions would have been more bearable if they had moved to the country or coast with more space, a private swimming pool and a decent garden to enjoy the outdoors.
This gentle swing has increased pressure on owners to adopt a sanguine view of buyers’ offers that fall short of their expectations. Thankfully, the shift has been slow, giving owners time to absorb the change. There are still many buyers looking for the right property and viewings have been and remain at a very high level. However, buyers are demonstrating a notable resistance to simply accept the latest increase in prices and are pushing hard for a better deal.
The long term rental market in leading Mediterranean resort areas is under pressure, government restrictions intended to protect tenants and effectively restricting landlords’ rights during the Covid crisis, has inevitably led to a shortage of property available with owners reluctant to comply with the new conditions.
The Spanish government, working with the EU, has proposed new guidelines for rental property, just passed in to law, to encourage owners of empty property to make their properties available to renters in ‘stressed’ areas, where there is a critical lack of properties for rent to the local inhabitants. Included are additional measures to protect vulnerable tenants and to impose a ceiling on rent rises to 3% during 2024.
The great surprise and good news is that hotels are full and visitor numbers around the Mediterranean are back to their pre-Covid levels. A welcome boost to local businesses, including cafes, restaurants, retailers, and all those in the hospitality sector.
Cranes dot the skyline, illustrating the extent of new property development, owner investment reforms and property improvements, that continues unbated. This can only be a good thing, Improving the quality and quantity of property, to better meet today’s discerning property buyers.
The cost of living increases experienced across Europe were, in the main, managed well with government support, discounting energy and fuel costs, and whilst these discounts have now expired, fuel and energy prices are slowly returning to pre-crisis levels, albeit food costs remain high.
Mortgage interest rates have increased across the eurozone as they have in the UK. However, as reported before, mortgages are mostly provided by the banks in the eurozone countries, and at a lower percentage share of the property purchase price than in the UK, the lenders security is greater. For example, in Spain, the maximum percentage mortgage granted to a ‘foreign’ buyer, i.e., a person who is taxed in another country, is restricted to 70% of the valuation or purchase price, whichever is the lower. Whereas, residents who pay their taxes in Spain, can obtain up to 80% of value, with the similar conditions applied. For more information please don’t hesitate to contact me.
The leading resorts around the Mediterranean are viewed by lenders as a secure place to invest. Mortgages are readily available. The swing to a buyers’ market is a modest movement and is, in my opinion, a necessary adjustment to temper the constant price rises and to reach a more equitable level that better reflects the modest rises in incomes.
I have worked in the international property sector for over 20 years. The above is drawn from my current personal experience combined with those of numerous leading international Real Estate firms that I have known, in some cases, for over two decades.
Despite worries of global warming it has been refreshingly cool and sunny this spring and, so far, remains so, ideal for viewing property before the high heat of the summer kicks in. We are blessed with some excellent new property instructions, from country estates, superb DOC vineyards with classical farmhouses, and impressive coastal villas and apartments with stunning sea views.
Wherever you choose to find your home or home from home, we are ready to welcome you. Now is the best time to travel, view and purchase property in the sunnier climes of Europe, whether it be Tuscany, mainland Spain, southern France or the Balearic islands.
For more information contact Paul Baxter at our London office:
Tel: +44 20 7839 0888