Wait and see property investors to capitalise on discounted overseas property

Thousands of people delayed buying property during the recession and may now benefit from discounted  overseas real estate prices which have dropped by up to n40% in popular destinations, it is claimed.

Lloyds TSB International suggests that many investors who delayed buying property overseas during the recession may now enter the market again due to a significant fall in prices and a renewed confidence in property markets.

Research reveals that prices in many parts of Spain, and other key overseas property locations have plunged by up to 40% in the last three years and that British investors have been adopting a ‘wait and see’ approach with mortgage sales remaining sluggish in some parts.

But new data from the National Federation of Estate Agents in France shows house prices increased in France in 2010 for the first time since 2007 and recent research by Germany real estate group, IVG2, suggests house prices in Spain may recover sooner than expected and faster than the rest of the economy.

'Key markets that were over heated in 2007, like parts of Spain and the US, are now buyer’s markets with many heavily discounted deals available,’ said Barry Luhmann, head of lending at Lloyds TSB International.

‘Many people preferred to wait and see how the markets and their finances would be affected by the recession, but after this recent lull in activity we expect interest in overseas property to return, possibly quite strongly, as the economy improves. Indeed, there are already signs that interest is picking up,’ he explained.

'To draw a comparison, sales of luxury cars fell heavily during the downturn as confidence drained from the economy. But many of the people who delayed their purchases by a year or two contributed to a strong year of sales in 2010.

We predict a similar phenomenon in overseas property to at least some extent. All of our market research points to the fact that many people in Britain still aspire to buying an overseas property, but a lack of confidence in personal finances and property market stability is holding them back for the time being,’ added Luhmann.

Average prices in Spain have dropped by 23% since their peak in 2007, while in key tourist destinations such as Ibiza and Costa Blanca, prices have fallen as much as 40%, which has spurred the Spanish government to appeal to British buyers to return. Similarly in Italy and New Zealand, prices have dropped by as much as 25% since 2007.

In recent years it has become more difficult to obtain an international mortgage deal with interest rates and customer service varying quite considerably across the market. This underlines the importance of obtaining the best deal and service, and Lloyds TSB International has now been voted the Best Overseas Mortgage Lender by consumers for four consecutive years.

The bank has been lending to customers for international property purchases for over 30 years, longer than any other major UK bank. It also lends in more countries than any other major bank.