Update on market over last month

• UK investors show greater interest in buying properties abroad
• Spanish Islands sees increase in UK Expats
• New low USA interest rates for foreign buyers
• Property market in South America goes from strength to strength

Commentary

There might be a recession at home, but latest reports from the Overseas Guide Company show that the number of potential buyers from the UK looking for homes overseas has increased in the first quarter of the year in comparison with the same period in 2011 with UK overseas home seekers particularly interested in French, Spanish and North American property. The main drivers behind the surge in interest are not hard to identify with discounted prices in all three locations and as far as Europe is concerned the value of sterling having risen relative to the Euro, providing further impetus to UK buyers seeking bargains abroad.

In Spain, which has seen its property market implode, the current situation for prices is not going to get any better in the short term according to research from Barclays Capital. They see property prices falling by another 18% on top of the 22% fall that has taken place since the market crashed in 2008. The weaker Euro and the likelihood that sterling will continue to pull ahead over the medium term is making French and Spanish property even more attractive for second homers, investors and those who see their future living as Expats. A number of the Spanish islands and especially the Balearics, has seen a strong growth in UK Expats over recent years, and has largely shrugged off the property downturn on mainland Spain. The number UK residents now living on the Spanish Islands has recently grown to over 24000. Mortgages are currently available to foreigners buying in Balerics at interest rates starting from 3.47%, with both fixed and variable rate products available over terms up to 40 years. Property funding is generally available up to 70% of the purchase price or property valuation (whichever is the lower) however some banks do view properties within the Balerics more favourably, so higher lending may be available depending on the quality of the case.

Reports from Goldman Sachs at the turn of the year suggested that the US property market was, after a three year slump, ready to turn the corner in the second half of 2012. With net inflows of foreign property investment amounting to over $82 billion year on year in 2011, $16 billion more than in 2010, the USA is seeing a huge resurgence of outside interest. With no lesser light than Donald Trump backing the recovery of the Florida property market this month, having purchased the Doral Country Club in Miami, buyers from Central America, South America, and the Caribbean have been snapping up Miami real estate. The feel good factor surrounding the US’s ‘sunshine state’ could be a useful barometer for the rest of the US market as interest may spread out from Florida. To further support the credentials of investing in US property this month we have managed to secure access to some excellent new low fixed rate mortgage deals for foreign buyers. With a fixed rate of interest of just 3.38% over 15 years or 4.25% over 30 years these deals offer very competitive finance solutions for both investment and holiday home purchases. Mortgage financing is currently available in America for both employed and self employed applicants up to a maximum 75% Loan to value, with loans starting from $50,000.

Further south, the property market in two of South America’s biggest economies, Brazil and Argentina is attracting interest from investors. In Brazil, a survey by Reuters among banks and business groups concluded that property prices would move ahead by between 5 -10% in 2012, with the more optimistic at the higher end of the prediction. Interestingly, the market in Brazil has been largely shielded from the worldwide economic downturn and experts believe that as the market has a high proportion of native buyers looking for principal residences and with good levels of employment and a strong economy, Brazil is unlikely to see a price correction in the near term. In Argentina, the market in the bigger cities, particularly Buenos Aires is powering ahead with sales up 13% over the same period in 2011. With rental prices increasing by as much as between 5 and 20% in the past year, Barrio Norte, Belgrano, Centro, Palermo, Recoleta and of course, Buenos Aires are being seen as investment hotspots for investors looking to benefit from the lucrative rental market.

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