With Christmas firmly with us and the New Year just around the corner, many will be considering their financial position.
Consumers still hanker after that place in the sun and if the numbers still add up then you may be surprised to see that consumers are increasingly heading towards a city destination for their ideal holiday home, over the traditional beach resort location. A question of city chic or holidays now restricted to two-day weekend breaks throughout the year?
Typically, when brokers are advising their clients on international mortgages and holiday homes abroad, it would be the likes of the Costa del Sol and Provence in the South of France that they would be more familiar with.
Rural retreats in sleepy villages, providing the ideal investment as a holiday home destination, and leading to the perfect retirement home, enabling consumers to sell up in the UK and leave the stormy weather behind.
However, recent research by GE Money Home Lending (GEMHL) suggests that more consumers are now switching to city homes abroad as their ideal holiday ‘home from home’.
Popularity of cities
It will come as no surprise to you that 80 per cent of consumers in the UK would consider buying a property abroad, but what stands out from the research is the popularity of cities as holiday homes in continental Europe and their location.
Earlier this year, I spoke about the popularity of Spain as a top choice for consumers, with 36 per cent of Brits still opting for the country as their most popular choice because of ease of language and as the best long-term investment, despite the fact that 82 per cent of those not purchasing in Spain stated that it was because there are too many Brits there.
It seems the ease of the purchasing process in Spain is a big pull for investors. Therefore, it will come as no surprise that Barcelona tops the poll for top European city holiday home destination.
Not only this, but Spain secures all top three places in the top five:
- Barcelona
- Alicante
- Marbella
- Paris
- Nice
Interestingly, when questioned about European cities as holiday homes, Britons did vary in ‘type’ quite significantly according to our research. It is often thought that most consumers would all opt for the obvious choices of Marbella or Benidorm, but it seems that we Britons are more cultured than we sometimes give ourselves credit for.
Over 37 per cent of consumers questioned chose culture as their top reason for choosing a specific country abroad for a holiday home and it seems this also expands to cities themselves.
Many brokers are aware of Eastern Europe and requests from consumers looking to profit from properties that are increasing in value in cities such as Budapest and Prague.
However, we can see that more western cities are still as popular as ever for investors looking for a holiday home or long-term investment abroad. For many, such cities represent good long-term investment value, offering the chance of a retirement home and in an environment which is more similar to that of the UK, especially when looking at cities in Spain.
The increase of city homes as holiday homes may also be linked to the fact that Britons are widely established as working the longest hours in Europe.
The majority of the working population rarely get the chance to take extended breaks abroad and with the advent of low-cost flights in the 1990s, it would be generally accepted that many chose homes that can easily accessed in a city for weekend breaks throughout the year, rather than the typical two-week break each Summer.
Advice and desires
With an average of 80 per cent of the UK population hopeful to own a house abroad one day, especially with the younger age groups of 18 to 24-years-old (91 per cent) and 25 to 34-years-old (84 per cent), it is clear that this is a market that will continue to grow.
Buying a second home though will always be a step that many people don’t take. However, as a mortgage intermediary, lender or provider, what we must do is ensure that consumers are not avoiding taking this step due to lack of advice or knowledge on where to turn.
Many mortgage lenders and intermediaries now offer international mortgages in the UK, making it easier for consumers to purchase their ideal holiday home. It seems that when purchasing a home, many Brits (66 per cent) turn to those who have already purchased a home abroad for advice. This is very encouraging and will provide them with insider knowledge on locations and tips on the process involved.
However, as we know all too clearly from the latter part of 2007 and the turmoil in the financial market place, mortgage products and rates on offer to consumers are constantly changing. Therefore, to ensure the optimum advice on the products that are offered, consumers must expand their research and also turn to mortgage intermediaries. In turn, intermediaries must be in a position to advise their end customers on products suitable to their needs in an ever-changing environment.
Mortgage intermediaries and financial advisers can continue to play a valuable part in the purchase of a consumer property abroad by offering advice on financial products, ensuring that their clients are making the necessary legal checks and making sure that clients are looking at the long-term benefits of their investment choice.
In keeping pace with consumer desires and the next property hotspots, mortgage intermediaries can be one step ahead of the game and benefit from this growing market in 2008.
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