Buyers hold fire in shock overseas property 'slowdown'
Sunday March 18 2007
NICK WEBB and
THERE has been a dramatic "slowdown" of Irish investment in overseas residential property this year, according to major industry players. For the first time this century, buying has slowed to a trickle in some of the more speculative markets including new eastern Europe schemes, ski resorts in Bulgaria, leaseback deals in France and traditional Spanish sun resorts.
Higher interest rates, a greater degree of uncertainty, a lower degree of consumer confidence and an oversupply of foreign property are seen as the main factors for the slowdown. The days of purchasers queuing at the launches of the latest foreign properties and buying everything in sight are over, according to agents.
Evidence of this slowdown appears in latest mortgage figures compiled by the Irish Bankers Federation. Top-up mortgages, which are most commonly used to fund overseas property purchases, slowed to their lowest level in almost two years in the final quarter of 2006, according to the research.
Frank Conway, of the Irish Mortgage Corporation, which provides equity release products to fund overseas property purchases, noted that there had been "a tapering off" in recent months. "We're not seeing huge money going east any more. Not like a few years ago," he said.
Mature markets such as Italy and France continued to perform but Portugal and Spain had "fallen off a bit". He suggested that bad publicity regarding investments in places like Bulgaria and Marbella, combined with a lack of transparency over land ownership regulations, had all contributed to this slowdown.
Estate agents and promoters have also experienced a significant cooling in the near decade-long booming overseas market. Gunne New Homes Overseas has only had two launches this year, both successful, and one of those was held in London. "The market is changing now, people are being more careful and for the first time they are actually going out to look at the properties they are thinking of buying instead of buying off the plans," according to Gunne's Niall McHenry.
Lisney Overseas Residential has stopped doing big-scale launches altogether. Sophi Palmer of Lisney's said the market has changed and the focus now is on one-to-one meetings with prospective clients. "We are also having to look even harder to find overseas developments that tick all the boxes in terms of access and price value for a more discerning buying public in the wake of the recent interest rate increases," she said.
