Azzetz showed this has risen considerably as a result of capital gains climbing to 33% as more reliable figures come to light. Economic growth in locations such as Poland will underpin the continuation of strong capital gains in some of the newer European Union members this year. Deposit levels are also low at 15%, making Poland a popular choice for investors.
Bulgarian growth in peripheral areas distorts national figure
Bulgaria has enjoyed a small spurt in annual capital growth from 13.9% in September to 17.3% for 2006 as a whole. Much of this growth has occurred in peripheral locations where prices are catching up with the tourist hotspots, while more popular locations such as the capital Sofia have grown by 9.8% and Bankso district by just 5.3%.
The rental market in Bulgaria is still fairly risky, with mortgage rates having risen from 6.5% to 6.75% and average yields of an unspectacular 5%. However, prices remain low and deposit levels have fallen from 35% to 25%, meaning investors who take a long-term view can still do well in Bulgaria if they accept short-term income losses.
The USA market has not yet completed downward curve
Better buying opportunities are likely to arise in the States over the next year or so, but investors need to wait on this as there is probably further to go before the market stabilises and offers the prime opportunity. There is great uncertainty over whether or not the chronic oversupply has worked its way out of the American property market, which has seen capital growth drop from 10.1% to 7.7% over the last three months with some price indices showing annual price falls. Mortgage activity is still shaky and the dollar is still extremely weak.
Holiday home owners in the States would be wise to take a 5–10 year view and focus on maximising letting potential. The rental market could benefit from any significant house price falls and if the value of the dollar remains low, international tourism will continue to soar, providing great opportunity for rentals.
France continues to outperform many emerging markets
Investors looking for a relatively safe home for their money that still offers high returns need look no further then across the Channel this year, where France is currently second in the table offering a total 51% return on cash invested. Its continued popularity as a holiday destination is ensuring a buoyant rental market with yields of 7% which, combined with capital growth of 7.6%, offers a strong opportunity for investors who can buy with deposits of only 15%.
The German market is stirring
After fifteen years of stagnation the Berlin property market is finally starting to stir as big business arrives, attracted by low start up costs and commercial office space which is considerably cheaper than in Munich and Frankfurt. Tentative price rises of 0.2% in November 2006 have risen to 0.6% in February 2007, after years of decline. Many properties are available to investors pre-tenanted, with yields in the region of 5.5%.
UK continues to outperform most overseas markets
The five major UK house price indices show an average of 9.9% annualised growth for the twelve months prior to January 2007, which when combined with average buy to let rental yields in the region of 6%, presents excellent conditions for residential investment. Fully geared buy-to-let investors achieved a return on investment of 57% through capital growth over the last 12 months. Buying costs and deposit levels remain amongst the lowest in the world.
Stuart Law, managing director of Assetz, commented: “The global housing market is performing well with positive capital growth in every destination on the tracker. Bulgaria, South Africa and Spain are likely to face a slowing in the rate of growth during the next few months, but are still along way off from falls in house values.
“Poland looks set to lead the pack of emerging markets this year, with strong capital growth and excellent local demand as well as foreign investment. 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. I expect to see continued strong growth and a flourishing rental market.”
