The latest report from Knight Frank on global housing markets reveals some of the winners and losers when it comes to house prices in 2016. In Europe, there are a complicated mix of countries still just about recovering from property crises and others experiencing a slowdown. So where are the best countries to invest in Europe?
Top Overseas Property Performers
While most of Turkey is actually classed as being part of Asia, 3% of the country is considered part of Europe and that includes half of Istanbul.
House prices in Turkey as a whole increased by more than 15% in the 12 months to April. Turkey has only recently taken away restrictions on foreign ownership and this is seen as one of the factors that have helped trigger a property price boom. This boom, however, is unlikely to last and there are signs that the pace of growth is slowing.
Anyone looking to buy investment property in Turkey should look carefully at external economic factors that may influence prices in the next 12 months. The market may already have peaked.
Property prices in Austria have risen by 7.6% in 12 months and the pace of growth looks to have increased so far in 2016. Austria is a country with an abundance of beautiful alpine villages and ski resorts yet it hasn’t suffered from rampant speculation as much as neighbouring Switzerland and France. If you are thinking of buying property in Austria now might be a good time to do it before prices increase.
The days of 35% per annum price growth when Poland joined the EU in 2004 are now a distant memory. The big money from an investment point of view has already been made in Poland but there is evidence that prices are once again on the rise at 6.4% per annum.
There has been a lot of rumour in the press that Spain’s property market has turned a corner and this has been proved correct with prises rising 2.4% in our 12-month period. Now may be a good time to buy in Spain before prices start to rise further and faster than they have done for a long time.
Markets Slowing Down
Germany’s cities, notably Berlin have proved popular with investors in recent years with some excellent rental returns. Unfortunately when it comes to capital growth, Germany’s property market is showing signs of slowing down and only posted 5.4% growth in 12 months between 2015 and 2016.
France rarely finds itself among the top performers for house price growth despite being a popular destination for overseas property buyers. The past 12 months saw just 0.5% growth, which means property will be worth pretty much the same as it was a year ago. France like Germany continues to suffer from a sluggish European economy.
Italy continues to struggle from the effects of the financial crisis and this unfortunately continues to way down on property prices. Prices actually went into reverse in the 12 months to January by 0.9% so anyone who bought in Italy last year may have a house worth less than it was 12 months ago.
That said, Italy is Italy and if you are prepared to put up with long term economic uncertainty in return for accessibility and the pleasure of owning a property amongst some of Europe’s most beautiful landscapes then the direction of the housing market will be of less concern
Croatia may be a popular destination for people looking for a cheaper alternative to a holiday in Italy or Spain, but this doesn’t translate into an ideal place to invest in property. It would be an understatement to say Croatia’s economy hasn’t been performing well in recent years and this hasn’t helped its property market which saw a 2.1% fall in average prices in the 12 months to 2016.
There are clear signs that the property market is continuing on downward trend, although it has to be said, GDP grew by 2.7% in the first quarter of 2016, indicating that recovery in the economy is underway, which could halt the slide in property prices.
Property prices fell still further in Greece at -5.4% in the 12 months to Q1 2016. Knowing when the bottom of the market will come is the key to making money in property and investors will be watching to see when that point is reached. Until then it would be hazardous to consider buying or investing property in Greece until its economic and political future is more certain.
Like Greece, the economic picture in Cyprus continues to look bleak. Property prices fell by nearly 2% between Q1 2015 and Q1 2016. Cyprus has also been dogged by scandal over the years where property investors have lost thousands. While the country undoubtedly has its charms, for investors they are best experienced on a holiday.