THE INVESTORS Chronicle reports Dubai and Bulgaria as being the hardest hit markets with price falls on investment property reaching 75%. Prices in the tourist hot spots of Cyprus have fallen with some developers offering 30% price reductions since the market peaked back in 2007.
Once the preserve of the well-off, overseas home ownership has rocketed in recent times. Encouraged by TV shows and cheaper mortgages over the last 10 years, an estimated 500,000 Brits now own a place in the sun and it has been estimated that the value of their purchases increased from £10 billion in 2000 to a peak of £58 billion last year.
This buying fever sent prices rocketing in Cyprus and many other overseas property markets and led many people to believe that buying a property abroad was a sound financial investment. But this buying fever came to an abrupt halt in when the credit crunch hit in 2007.
According to property consultancy Savills, at the height of the market 80% of overseas property purchases were financed by a mortgage; this compared with a mere 20% just seven years previously. The price collapse in many of the once popular foreign property hot spots means that the majority of the estimated 35,000 Britons who bought property in 2007 and 2008 will be in negative equity.
Some foreign banks, including those based in Cyprus and Greece, are seeking to chase mortgage defaulters in the UK. Since last Christmas, EU creditors can pursue a European order for payment which makes the process of debt recovery easier and cheaper.
Paul Connearn, a spokesperson for the UK National Debt Helpline, said that “There hasn’t been a sudden rise since the legislation was introduced, but we are getting a steady trickle of cases where people are in situations abroad that haven’t worked out,” adding that “Creditors could try and enforce the debt through a charging order on UK assets, typically the family home. This secures the debt on that property, but doesn’t necessarily force the sale.”
National Debtline (England, Wales & Scotland) – Tel: 0808 808 4000 – Monday to Friday 9am-9pm – Saturday 9.30am-1pm
Debtline (Northern Ireland) Consumer Credit Counselling Service (CCCS) – Tel: 0800 027 4990