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 Spanish/French Price Drops  06.10.2007 back
The value of British holiday homes abroad in Spain and France has fallen by as much as 15 per cent in the past three months.

The value of British holiday homes abroad has fallen by as much as 15 per cent in the past three months.

A series of second home hot spots across the Continent has had thousands of euros wiped off the value of holiday villas, particularly those along the Mediterranean, an investigation by The Daily Telegraph has found.

Almost a quarter of a million Britons have bought homes abroad in the past decade, doubling the holiday home ownership numbers and with the majority buying properties as an investment.

Spain has been worst hit but there has also been a drop in property prices in France.

The holiday home market in Bulgaria, a destination that had become popular with British people buying abroad, has shuddered to a halt.

In Cadiz, in south-west Spain, prices have dropped by 15 per cent; in Alicante, on the Costa Blanca, prices have fallen by two per cent; in La Rochelle, in France, three per cent was wiped off prices and in Perpigan, one per cent. All in the past three months.

The average prices of a two-bedroom apartment in Majorca has fallen from £225,000 to £203,000, a three-bedroom villa in Lanzarote has dropped from £248,000 to £228,000. Prices in parts of Bulgaria, after having shot up in value by 40 per cent last year, have stagnated.

Property experts say that those who will be hardest hit are people who have invested within the past year - especially into new developments - and those who need a quick sale.

This week it emerged that the French property market has fallen in value for the first time since the 1990s, with overall house prices dropping by one per cent in the three months to September.

While the falls are modest in some places, they come on top of some substantial price drops in certain areas last year, such as in Bezier in the south west, where house prices fell 10 per cent in 2006.

Jacky Chapelot, a leading estate agent in the south of France, said sellers needed to "moderate their asking prices" adding, "both the sale and rental market appear overvalued".

Europe has suffered even more severe interest rate rises than Britain, making property increasingly unaffordable, especially in Spain, where most mortgages are variable rate loans.

Last week the Valencia property developer Llanera collapsed, with £520 million of debts, hit by the credit crunch and higher borrowing costs. It also suffered from the oversupply of properties in Spain, which has an estimated 300,000 flats lying empty after a construction boom.

Charles Weston-Baker, who heads the international division of the estate agency Savills, said parts of Europe remained very strong, especially southern Italy and parts of France. However, investors who have bought new developments in the Mediterranean area could be in trouble.

"Certainly the Costa del Sol is very slow," he said. "And I have seen a feeding frenzy in Bulgaria and Turkey with people buying off plan without seeing the properties."

Figures released this week by the National Office of Statistics show that owning a property overseas has never been so popular, with 60 per cent more people owning second homes abroad than five years ago.

Source: Daily Telegraph

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