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.”
Contact points
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
@Peter & @Dee
Last April Charles Charalambous wrote an article about inflated Property Transfer Fees that looked at the subject in some detail. You can read it at: Is a property only worth what someone will pay for it?
This practice also raises the question of why the Inland Revenue Department does not pursue the property’s vendor?
If Land Registry decides that the declared sale price (the price on the contract) is too low, then the vendor must also have underpaid his Capital Gains Tax!
When people are not buying homes to live in, but are rather treating property as an investment for profit, the market becomes as cyclical as other investment markets. This has become worse with the advent of TV programmes urging people to do it and “new paradigm” methods of lending more money based, on the probable rise in property prices cancelling out the debt. Last week, the UK Housing Minister, Grant Shapps referred to unaffordable, crazy housing prices, even at current values.
The other side of the story is that each time there is a housing market crash, people who need a home have a chance to buy before the upwards cycle begins again. That may seem a long way off, but there are too many VIPs with big property portfolios for things to remain as they are for very long.
@Peter; it’s not just Paphos Land Registry that inflates the sale price on transfer!
Peter.
The epithet ‘Banana Republic’ is well deserved and the Paphos Land Registry is justifying and adding weight to it.
No doubt you’ve seen the letter (posted online) in yesterday’s Sunday Mail proving the point about this country’s ‘artful ways’ of extracting/blackmailing monies from law-abiding citizens. Come the revolution…
The bubble has well and truly burst, and still they are in denial. Building in Cyprus for a better “Tomorrow”. And we all know that here “Avrio” never comes.
With so many empty flats, apartments, houses and shops the whole of Paphos will look like a run down ghetto, complete with its poor road system. It really will be the end of the line.
Except of course for the Land Registry in Paphos, which it appears, keeps on increasing the costs of buildings when the title deeds are issued. Why is that just happening at the Paphos Land Registry and not at the other offices? Can someone explain? Because what appears to be happening are cases of ‘Blackmail’.