Crunch Makes Established Property Markets like France and Italy Competitive

From 2005 until the end of last year, the growth in popularity of off plan property and emerging markets with overseas property investors was immense. New EU member states in Eastern Europe are a perfect way to illustrate the flimsy nature of this popularity.

As a state would get on track for EU membership, overseas investors, say from Britain would snap up properties in the country because they were so much cheaper than what could be found back home. This immense popularity, and then EU membership and often the switch-over to the single European currency would make property a lot more expensive to the foreign buyers, and as a result the country would lose a lot of its appeal. Onto the next emerging market the investors would go.

The trend in short was: investors were attracted by the countries with cheap properties with growth potential, the cheaper the property the bigger the potential for the most rapid growth. Towards the end of last year new markets like Albania and Turkey were taking centre stage.

Property in France, Italy, and other established European markets suffered because property prices were higher, and thus they could not compete with their new European rivals. Now we are amidst an international downturn all bets are off; the playing field has been levelled to a great degree.

The established markets have seen property prices dropping, whilst prices have held firm in many of the emerging markets, or certainly not dropped by anywhere near as much. This is making the likes of Italy and France more competitive.

On top of that there is the fact that the Pound is worth .09 Euros more than it was, taking an additional 9% off Eurozone property prices. That said, it is also worth mentioning that Sterling has also taken a massive growth spurt against the Turkish Lira, and Turkish property is currently up to 15% cheaper to British buyers.

Sterling is rising against the Euro because economists now believe they can call the full extent of the UK recession, whereas some European and Eurozone countries are only just beginning to slide into recession. Therefore this is likely to continue throughout the next 6-9 months at least.

As this growth continues the Eurozone markets, which, with the exception of Slovakia are largely established markets like France and Italy, will continue to grow in popularity with British buyers, while the price falls see popularity grow with buyers from other demographics.