British buyers are finally starting to crawl out from under their umbrellas to buy property overseas. Greece, Spain and Portugal are seeing the biggest uplifts in interest - with Spain proving by far the most popular destination.
Buyers are being drawn in by dramatically reduced prices, but are you tempted, and is it a good idea?
InterestThe increase in interest was noted by Rightmove in its monthly search report, which examines the countries where British buyers are house hunting. It found that in June Greece saw a 5.3% surge in searches, Portugal a 3.9% increase and Spain a 2.3% rise. Spain continued to take the top spot for the most searched-for overseas country, with 28.1% of all searches.
And these aren't just idle searches; according to Richard Driver, a currency analyst with Caxton FX, there has been an increase in people exchanging currencies for house purchases in a number of countries. The most marked increase by far is in Spain. He told AOL: "It's partly a reflection of how property prices have fallen in some countries, and people see real bargains to be had in places like Spain."
Bargains?These falls have been dramatic. According to Standard and Poor's, housing is in a deep slump in Spain, and has fallen on average 28% since 2008. Some properties have seen even bigger dives from the peak, as the banks which repossessed them at the top of the market are trying to sell them off at a knock down price - with as much as a 70% reduction.
He adds: "The exchange rate with the euro isn't that great, as we have seen sterling fall from the 120s to 115, so the fall in house prices won't translate directly into a saving in sterling. If it wasn't for that we would expect the trend to be even more marked."
Should you buy?If you have the money to spare, and are buying a holiday home, then there's an argument that you could take advantage of lower prices.
However, there are a couple of provisos. If you are planning to live and work in Spain you need to think very seriously about the job prospects in the struggling country.
If you are buying as an investment, you also need to be aware that the sell-off of repossessed properties has only just begin. S&P has warned there is a glut of property which has yet to reach the market, and as a result it expects prices to fall 8% this year and 5% next year when these properties come to market.
Will UK house prices rocket in 2013?
In some areas prices are set to fall even more dramatically - with a predicted 30% drop in major cities by 2018.
In the grand scheme of things, while prices have fallen dramatically since the top of the market, in the 10 years before 2007, they rose almost 200%, so historically we are only just back down to the kinds of prices seen in 2002.
So what do you think? Are you tempted?
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