Neil Lewis, chief executive officer of Property Secrets believes that first- time buyers will start to consider purchasing their first property abroad rather than the UK.
He says with super-charged growth, European property markets such as Poland, Czech and Romania enable UK buyers to make quick returns with low initial investments, whilst the UK market for many remains inaccessible.
He says: I believe that there is a trend developing. Weve seen virgin investors recouping a 300% plus rate of return on properties in Central and Eastern Europe which in the long term has allowed them to re-invest in the UK.
UK GDP is growing at around 1.8% for 2006, whilst its Polish, Czech and Romanian counterparts are growing at well over 5%. These form good indicators for the strength of a fast growing property market.
Property Secrets member Geoff, a teacher from London elected to invest abroad after being priced out of the UK market.
He says: I was concerned at investing in the UK market due to the prohibitive house prices and the fear of a collapse in the buy-to-let market but was extremely interested in property as an investment. Just as it appeared the UK market was slowing down, other European markets were experiencing high growth that in my opinion made them better investments.
He elected to buy an off-plan apartment in a development in Bucharest paying an initial 25% giving Geoff the flexibility to review his development when the 75% was due on completion in July 2008.
He continues: The relatively low entry payment and the predicted rapid growth of the market made Romania a better bet than a risk laden UK investment. When the apartment is completed, l will be in a position to either sell, or let the property to a keen rental market.
Romanias economy is experiencing rapid growth; its GDP has increased from 6.9% to 7.8% in Q1 and Q2 respectively in 2006. Its entry into the EU promises sustained foreign direct investment in the near future, plus comprehensive economic and political reforms that have stimulated the property market. The projected rate of return for Geoffs development stands at 308%.
But Lewis warns that new buyers face greater challenges buying abroad than seasoned property buyers.
Experience as well as knowledge of the market and property issues is often hard earned. This is challenging enough in the UK, so imagine the language, currency and legal pitfalls that beset first-time buyers abroad.
On this topic, Geoff concludes; My advice to people in a similar position would be to investigate all aspects of buying a property abroad, and then sourcing a company that addresses all of your concerns; from researching and sourcing the development, to managing the purchase, through to the furnishing and the letting of it. It vastly reduces the hassle, minimises the risk and appears more likely to save you money.