Post Brexit – Europe Still A Good Investment Bet

30.08.16

With sterling down in the dumps, you might think that now is not the best time to invest in that idyllic Mediterranean bolthole by the sea. The likelihood of leaving the EU however, should not make buying on the continent the renewed Herculean task that many Brexiteer doom-mongers are predicting. Take France, plenty of non-EU nationals currently buy here with legislative changes this year making property taxes equal for all buyers, irrespective of where they’re from. A fair proportion of France’s housing market has also been fallow for a few years, with an adjustment in prices making up for currency fluctuations and luring foreign buyers attracted by more negotiable offer conditions.

There are still plenty of competitively priced properties to be found across wider Europe too, when compared to prices at home. House values across the European board fell by an average of 30-40% during the financial crisis and still haven’t fully recovered. That said, it’s important to nail down the exchange rate before buying, to ensure any unexpected movement doesn’t derail the purchase or indeed your ability to finance the property on an ongoing basis. If your mortgage is in euros but your income in sterling – for now not so good – life has just become very expensive. Time for a chat with your broker.

As a global region, Europe offers the potential for an improving economy and higher inflation positively influencing investment. This is the main reason why real estate in continental EU and recovering markets has historically performed so well. As a buyer, you have the possibility to invest in prime property in an established market - a secured investment at a low return - or purchase in those markets where prices have fallen but are recovering. Investors who are willing to take on more risk - maybe in central Europe – can gamble on a higher return. Remember, one size fits nobody and you get to choose.

Don’t forget too, that UK buyers account for a sizeable percentage of property sales in key EU markets, particularly France, Spain and Portugal, with British homeowners making a significant contribution to local economies across the EU - in particular in those areas with a high concentration of expats. Countries around the world are keen to encourage property ownership; so do you see Spain and other countries being happy to risk losing such important stream of foreign currency investment and revenues?

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