- Posted by Girasol Bespoke
- On April 12, 2016
Investing in a property abroad has always been a dream for many people. Whether they are looking for a second home in the sun or a buy-to-let investment, favourite destinations such as Spain, Portugal and Italy have long been a hot prospect, writes Nigel Salmon of Girasol Homes.
Now buying abroad is becoming even more attractive.
From April 1, second homes or buy-to-lets in the UK will be subject to a 3% increase in stamp duty which will add thousands of pounds to the cost of the property. The chancellor decided to penalise second-home owners and landlords in a bid to ease the housing crisis and encourage more first-time buyers to get a foot on the property ladder.
Taxes on buying a property abroad will not change, however. Property hotspots in Portugal and Spain also tend to be much more affordable than in the UK too. Indeed, homes in some of these areas are considered to be under-valued so it is possible to invest in great locations at attractive prices.
Organisation for Economic Development research shows the cheapest property is in southern and eastern Europe, including Portugal, Spain and Italy.
These are among the most undervalued housing markets globally. The OECD analysis compares local prices with typical wages and then sets this against the long-term averages.
Taking 100 as the average reading, a score of 110 means local property is 10% over-valued against the long-term average. The table shows the United Kingdom’s property is 7% over-valued, which is partly due to the housing shortage.
Spain is undervalued by 26% and Portugal by 5% so these are attractive areas to look at investments.
Spain enjoyed a property boom until about 10 years ago when the bubble burst. This led to a glut of properties on the market with prices dropping considerable.
In some parts of the Costa Blanca in Spain and the Algarve in Portugal prices were 50% below what they could sell for at the height of the boom.
Even now, prices are only rising slowly and only went up an average of 1.2% last year so Spain continues to have many properties on the market for less than they fetched 10 or 15 years ago.
It’s a great time to buy in Spain or Portugal.