The research brings together all the key investment criteria for UK buy-to-let and overseas property hotspots to form a quarterly investment Tracker.
The Tracker reveals that in the second quarter of 2006 Bulgaria has lengthened its lead over the other hotspots even further, rising from a 116 per cent return on cash invested in March to 137 per cent currently. Borrowing is now also cheaper than it was in the spring, with mortgage rates having fallen from 7 per cent to 5.95 per cent. Deposits required have also dropped from 30 per cent to 25 per cent, meaning greater gearing and bigger returns for investors. Bulgaria has now established a stable resale market and is proving it has staying power as an investment destination, especially with the strong tourist market in ski resorts such as Bansko, the introduction of no frills airline routes and the approaching EU membership expected in 2007. Any destination hoping to oust Bulgaria from the top spot where it has been since February 2006 still has a long way to go.
Greece is now showing positive price growth, with house prices having risen by 7.9 per cent over the last 12 months. This brings the total return on cash invested from 2 per cent previously to a much more respectable 25 per cent.
In addition, Poland’s property market has had an excellent first half of the year. Word from the professionals on the ground indicates that prices have risen between 20 per cent and 30 per cent in 2006 so far, which would give tremendous return on capital for investors there who can buy with typically 20 or 30 per cent deposit. Warsaw’s property prices remain amongst the lowest in Europe and the introduction of major industry to the city is attracting an increasingly young and wealthy population.
Investors in the United States have seen the value of the US dollar fall from $1.75 in April to $1.88 currently to £1 Sterling, which equates to about a 7 per cent loss of capital for British investors who bought there for cash or remortgaged their UK home in order to buy. However, those who took out an American mortgage will be less concerned, as the Sterling value of their debt will have fallen by the same amount. U.S. house prices rose about 12 per cent over the last 12 months, but much of this gain would have been wiped out by the recent currency shift.
With capital gains of 12.8 per cent, Spain is also still in growth mode, albeit at a slower rate than in 2004 and 2005. Official house prices have continued to rise, but Assetz suspects this is mainly the result of rises in declared house prices, with less cash being involved in transactions. This is because of increased transparency in the Spanish house-buying process. However, the market continues to be underpinned by strong demand from Spanish locals as well as overseas investors, resulting in gross rental yields of 8 per cent and a total of 43 per cent return on cash invested.
Stuart Law, managing director of Assetz, commented: “The choice of overseas destinations available to investors is growing increasingly wide, driven by EU expansion, new low-cost flight routes and the prospect of hefty returns particularly in emerging markets such as Bulgaria and Poland. More traditional destinations such as France and Cyprus are still stacking up very well against the competition and hold huge appeal for investors who are attracted by a stable growth pattern, uncomplicated buying process and guaranteed resale market.
“However investors keeping an eye on home turf will be interested to know that the six major UK house price indices are now averaging 6.8 per cent growth, resulting in a healthy 44 per cent return on cash invested.”
