The UK housing crisis has been a national talking point since the 1980s. And with UK property prices hitting their highest level on record, it could be time to look elsewhere.
For many investors, staying close to home is appealing. As such, Europe’s market is coming out on top. Not only is it a stone’s throw away, but it presents the opportunity to live and work in a variety of locations. You can probably keep your job too thanks to the new flexibility on remote working.
The continent is also brimming with investment potential. It’s largely cheaper for property than the UK and means investors don’t have to rely on one currency. If their current portfolio is packed with British real estate and the pound tumbles, they could pay the price.
So, which locations are tickling British investors’ fancy? We’re taking a look in this article.
Vive la France!
While Spain remains king of the continent for British investors, market data suggests France is having a go at the crown.
Research from Kyero points at traditional properties from the south of France as the go-to for Brits. The data for the second quarter of 2021 highlighted regions like Alpes-Maritimes, Var and Dordogne as the chart-toppers. In terms of most sought-after cities, Nice, Cannes and Sainte-Maxime came out on top.
France is a desirable location for many reasons: the warm weather in the south, stunning cities in the north, and great food and wine pretty much anywhere. So, when you factor in the affordability of French real estate, you can see why buying property in France is becoming so attractive to foreigners.
Kyero’s research into its own properties found that France outranks its rivals by a noticeable margin. The average asking price for French property in October 2021 was around €236,350, just pipping the Portuguese (€249,000) and crushing the Spanish (€290,000).
House prices in France have also been steadily increasing over the years and the property market is currently experiencing its highest surge since 2011. This may have interested overseas investors looking to get stuck into an emerging market.
Lockdown leads to Italy
The UK’s high house prices aren’t the only factor sending investors abroad. The Covid-19 pandemic has inspired wealthy Brits to purchase property in Italy. Mainly, this is due to low tax rates and remote working, as well as generally more affordable housing.
Real estate agents have seen surges in demand for Italian property since the coronavirus made itself known. Between January and September 2021, Savills processed the same number of contracts in Italy as it did for the entirety of 2019.
Similarly, Sotheby’s saw a 74% increase in sales of Italian property in the first eight months of this year compared to 2019. Most of these homes were bought by British and American clients.
As previously mentioned, tax incentives may play a role in tempting British investors. For instance, non-residents face no capital gains tax if they sell their Italian property after owning it for five years.
Additionally, transaction costs are lower in Italy compared to other top European destinations like Spain and Portugal. This is according to a report by Knight Frank in 2021. Italy does fall short of France, however.
Properties in need of renovation are also becoming more popular with overseas buyers. The Italian government introduced a ‘super bonus’ offering tax benefits on improvements to homes that increase energy efficiency. Prices are attractive too, as some Italian citizens look to sell their second homes to support themselves financially. Many of these properties are in need of renovation.
Italian property is also a lure for the very wealthy. A flat tax regime means income tax peaks at €100,000 per year. Knight Frank estimates that almost 700 people worth more than $30 million have applied for residency using this tax policy between 2017 and 2019. The vast majority of which are UK citizens.
The rise of the digital nomad
We’ve spoken a bit already about remote working giving overseas sales a boost. And the role of the digital nomad can’t be ignored. Usually comprising younger professionals, digital nomads aren’t tied down to an office job and only need an internet connection to get their work done.
Since the start of the pandemic, companies all over the world have been forced to accommodate home working. And it hasn’t taken long for people to realise this includes working from home abroad.
As a result, demand for European property has shot up as young Brits seeking warmer, more affordable pastures. Kyero reported a 446% year-on-year increase in Brits aged 18-24 viewing Spanish property on Kyero.com. The trend can be applied across the rest of its European markets too.
European hot spots have looked to capitalise on such interest. Many nations have introduced flexible freelance visas to cater for foreign professionals. With both purchasing price and rent appearing more attractive to young Brits, it’s no wonder property overseas is taking their interest.
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