North-South divide closing
The RICS Housing Review of 2006, which analyses inflation, building activity, mortgage market and turnover activity across 18 European housing markets, concluded that properties in Northern Europe are becoming more popular for overseas investors. The survey revealed Estonia, at 28 per cent, and Denmark, at 22 per cent, topped the European price inflation league, with France and Spain achieving modest price rises, dropping in the table to third and fifth from their position as leaders during 2004.
Commenting on the findings, Milan Khatri, chief economist at RICS, admitted the European market, as a whole, had increased over the past few years and was expected to continue. He said: “We expect the European house price boom to run into its eighth year in 2006, with the market supported by a clear upturn in economic activity and income levels. Further interest rate rises by the European Central Bank are certain, which will restrain but not prevent additional price rises.”
Simon Conn, managing director of Conti Financial Services Ltd, agreed with the findings. Speaking at the Scottish Mortgage Business Expo, he said the current strength of the British housing market had helped people realise the increasing opportunities available overseas. “Lower interest rates, more disposable incomes, cheap flights and a buy-to-let boom have all helped the overseas market,” he said.
He added properties such as Bulgaria and properties in previously ignored Eastern European destinations were becoming increasingly popular for buyers, as well as destinations further afield, including South Africa and Dubai.