The percentage of loans for house purchase accounting for first-time buyers has fallen dramatically in the last five years. In 2003, only 29% of loans for house purchase represented first-time buyers, compared to 47% in 1999.
The inflated UK housing market has given rise to an emerging trend with the entrance of first-time buyers in the overseas property market where house prices tend to be far lower than in the UK.
Karina Purang, financial analyst at Datamonitor and author of the report, says: “First-time buyers are attracted by the possibility of realising profits by buying at relatively low prices in less popular regions and selling when property prices start rising due to an increase in demand. Such speculations, if successful, can lead to significant profits, which can then be used towards the deposit for buying a property in the UK.”
Buying a property abroad is at a closer reach for many that it was years ago. According to industry estimates, two million Britons currently own a second home in the overseas property market. While retirement remains a main reason for buying a property abroad, people buying a property abroad are getting younger. Many Britons falling in the 35-45 year old age band have bought or are looking to buy an overseas property for holiday purposes.
Purang adds: “House prices in the UK have rocketed during the last few years and many average income earners have been able to enter the overseas property market by withdrawing equity in their UK property for a deposit.”
Spain – especially the Costas – and France remain the most popular destinations when buying property abroad. Datamonitor estimates that, of the total number of overseas properties owned by Britons, 37% are located in Spain and 25% in France. However, the downside of a high and growing demand means that these property markets are currently overvalued.
Despite the number of good property deals still available in Spain and France, an increasing number of Britons are turning their attention to other further destinations. Florida, the Caribbean and Eastern Europe are experiencing an increase in property demand from Britons. Buying abroad is on the rise as more Britons seek a change in lifestyle. The future of the overseas property market looks promising as cheap flights, greater accessibility to remote places and a willingness to travel further to get to their second home are causing Britons to enlarge their horizon.