Is now the time to buy a bargain holiday home?

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Baby boomers are flocking to buy overseas properties, according to a new report. It says that one in ten have a definite plan to buy a holiday home in the sun, while 38% would consider it. These figures are at new highs since the financial crisis.

So what's driving the new enthusiasm for holiday homes, and is now the time to buy?


The report, by HSBC found that the proportion considering buying a holiday home abroad had risen from 30% before the financial crisis to 38%.

James Yerkess, HSBC Head of Foreign Exchange, said: "The economic downturn has had an impact on the income and savings of many but it has also helped lower the price of property in numerous overseas locations. Many of the baby-boom generation, who are now approaching retirement, are fortunate enough to remain relatively asset-rich despite recent economic frailties and this has opened up opportunities to take advantage of lower property prices abroad."


Prices have fallen strikingly in some of the most popular holiday home hotspots - most notably Spain (where HSBC says 26% of baby boomers are considering buying a holiday property).

As we reported last month, Rightmove has seen an upswing in interest in buying in Spain. Standard and Poor's says that prices there have fallen an average of 28% since 2008 and in some cases asking prices have fallen as much as 70%.

The other buying hotspots include France, Italy, Portugal and Greece, where there have also been significant falls. According to S&P, France saw house prices fall 2% last year and 4% the year before. Meanwhile Italy fell 5% last year and 3% the year earlier, Portugal was down 3% last year, and Knight Frank says that in Greece prices fell 12% in the last 12 months and 10% the year earlier.

The price falls haven't all been passed on to UK buyers, because currency movements have given us a worse exchange rate over time. However, there are still substantial savings to be made from five years ago.


The economic instability in these parts of the world can make mortgages harder to come by, but the report found that on average, those considering buying a holiday home abroad would spend £116,846 on the property with the vast majority saying they would purchase the property outright, rather than with a mortgage.

Over a third (36%) said they would use savings to fund the purchase while nearly a quarter (24%) would downsize in the UK to release the funds required. One in twenty (4.5%) would use the lump sum from their pension to provide the funds needed while 4% would remortgage their current home to release the money.

As cash buyers, their options remain wide open.


However, there is a caveat to all of this. If you can afford to buy at these prices, and want to own regardless of what happens next, then feel free. However, if you want this as an investment, it's worth bearing in mind that the pain may not be over yet.

S&P says that prices in Spain, for example, have further to fall. It expects drops of 8% this year and 5% next year as banks start to sell off repossessed homes. France, meanwhile, is likely to go through a protracted slowdown and the company says it is at the "very beginning of a correction phase."

There also remains the risk that cash-strapped countries will view property owners - particularly those from overseas - as a useful cash cow. No one can guarantee that a property tax on holiday home owners isn't lurking around the corner in any of these markets.

But what do you think? Are you tempted to buy overseas?

Top Ten Weirdest Holiday Home Insurance Claims
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Is now the time to buy a bargain holiday home?

The owner of a holiday home in Spain returned to inspect his property after he had let it to a group of young people in their 20s for two weeks, to find that they had created an indoor beach including sand and water to emulate the sea. The youngsters explained that the local beach “hadn’t lived up to their expectations”.

A slightly oblivious swan didn’t see what was coming his way. It was flying happily through the air, completely unaware of a set of high voltage power cables in its flight path which it duly hit. The swan had the shock of its life and dived straight for the roof of a holiday home underneath, crashing through the roof and leaving a massive hole in need of fixing.

At a holiday home in France, a cow walked over a swimming pool cover. As the cow was considerably heavier than the cover could hold, the cover broke and the unsuspecting cow took an involuntary dip in the pool; resulting in considerable damage to the pool and the need for a winch to rescue the distraught bovine.

Holiday guests staying in a Spanish property moved items of furniture from inside the holiday home they were renting, including a sofa, single bed and chest of drawers, into the shallow end of the swimming pool. The guests had been under the influence of alcohol when they’d decided to rearrange the furniture in such a way and claimed they "couldn’t remember" why they had done it.

A particularly passionate couple managed to not only badly scratch the wooden floor of their bedroom by causing the bed to move vehemently, but also caused the bed to break, as well as the bedside lamp and bedside table. The couple explained that all damage had been caused during one session of lovemaking and they apologised profusely.

Following a rental, a holiday home owner made a gory discovery; he found blood splattered all over carpets and walls. After further investigation, he discovered a makeshift cardboard coffin containing a pig’s head in the bin, suggesting that a sacrifice had taken place at his property.

A young couple tried to pursue a claim against the owner of their holiday apartment in Spain on the basis that both bed sheets and towels were "too hard" and caused scratches and irritations on the skin, which prevented them from using the pool and sunbathing comfortably.

A holiday cottage in Devon needed completely redecorating after the holiday guests had decided to have an indoor barbecue on the flagstone floor, as ‘the weather didn’t allow for having it outside’.

One unsuspecting holiday property owner in Italy was shocked to find out that his house had been turned into a brothel by his guests during a four week rental period, resulting in the need for a deep clean and replacement of soft furnishings.

A lady in her late 30s from Manchester sought compensation from the owner of her holiday home in Marbella as the gravel on the driveway "had wrecked" four pairs of her designer stilettos and forced her to replace them with new ones.

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