Tag: holiday let

Savills & HomeAway: 60% of Second Homes are Bought to Let

17 September 2018 – Eje Prime

Buying a second home with the objective of putting it up for rent. Currently, that is the main reason why more than 60% of owners around the world acquire an asset of that kind, according to a study prepared by Savills and HomeAwayTM.

“In a low-interest rate environment, investors look for assets that generate income”, says Paul Tostevin, associate director at Savills and the person responsible for the report. The situation has changed in recent years, given that, for example, at the beginning of the 2000s, only 14% of second homes were purchased with the objective of letting them and not for personal use. During the credit crisis, that figure increased to 19%.

The average purchase price of a second home in the Spanish market was €245,000 in 2017. Nowadays, almost 40% of owners obtain profits from their properties and approximately 30% partially cover the expenses associated with the asset.

In terms of the location of the asset, less than 5% of the second homes owned by Spaniards are located overseas. The main regions where they do own second homes in Spain include the Canary Islands (12%), the Costa del Sol (9%) and the Balearic Islands (9%). The increase in the arrival of international tourists in recent times has caused the owners of these homes to lease them more frequently to be able to obtain income.

In terms of the rest of Europe, the study reveals that Brits purchase the most second homes outside of their own country. Only 24% of their properties are located within the United Kingdom, 19% are located in France and 16% in Spain.

Original story: Eje Prime

Translation: Carmel Drake

Sharp Fall in House Purchases by Brits in Alicante due to Brexit

29 December 2017 – El Boletín

A survey of real estate professionals conducted by the College of Real Estate Agents (API) of Alicante reveals that Brexit is having a significant effect on the real estate market in the region. The research indicates that many areas in the province, in particular along the coast, have experienced a notable decrease in the volume of house sales to British buyers in 2017 and that this trend is forecast to intensify in 2018.

The API College of Alicante points out that “traditionally, Brits have represented one of the largest groups of house buyers in Alicante, the province where the most homes and apartments are sold to foreigners in all of Spain”. Some of the Real Estate Agents are certain that 2017 has seen the lowest volume of sales to British citizens in decades”, although the situation is not being replicated with other overseas buyers.

Moreover, API’s research also shows that the decrease in sales to British citizens does not necessarily mean a reduction in the volume of purchases by foreigners, given that the gap being left by the Brits is being covered by foreigners from other countries. The report indicates that Belgians, Dutch, French, Norwegians, Germans and Russians will be the most active house buyers in 2018. People from up to 125 different countries are now buying homes in the province of Alicante.

Moreover, Brexit is not only affecting house purchases, it is also being felt in that more and more British citizens are putting their properties up for sale in the province of Alicante. In summary, more than 90% of the Real Estate Agents that work with foreigners have already felt the effects of Brexit on their operations and are convinced that the trend may yet intensify further during the course of next year.

Prices on the rise

Another conclusion from this study is that “nine out of every ten APIs interviewed are convinced that house prices in the province of Alicante will continue to rise in 2018, with increases that could range between 3% and 10%, depending on the area and type of home”. The average forecast increase in house prices amounts to around 5% in the province of Alicante as a whole.

The Real Estate Agents are also convinced that, after a year marked by the recovery of the sector, 2018 is going to be a year in which house purchases will continue to rise. “The second-hand market is going to continue to perform well, but 2018 will probably be the year in which new builds start to take off again, in towns where there is still land available”, explained Marife Esteso, President of the API College of Alicante.

In 2018, the worrying upward trend in the rental market is also expected to continue, where the gap between high demand and scarce supply, together with the diversion of homes to holiday lets, means that prices are going to keep rising. In this sense, many real estate agents indicate that the rise in holiday rentals is being driven not only by the higher returns on offer but also because holiday lets allow owners to avoid the problems of non-payment and property damage that are typically caused by long-term tenants.

Original story: El Boletín (by E.B.)

Translation: Carmel Drake