Property prices are booming in the new Europe and for investors there are more gains to come.
Property prices are booming in the new Europe and for investors there are more gains to come. << Back to list of articles
The new members of the European Union (EU) have never had it so good. Property prices have more than doubled in the past two years, with more gains predicted.
Economic growth has benefited houseowners in Hungary, Poland, the Czech Republic, Slovenia, Estonia, Latvia, Lithuania, Slovakia, as well as Malta and Cyprus. Investors are rushing to buy property in cities such as Budapest, Prague, Bratislava and Warsaw, attracted by good rental yields and capital growth.
Bulgaria, Romania and Croatia will have to wait until 2007 for EU admission, but bargain hunters are already mopping up low-cost holiday homes there and prices have soared. With more cheap flights to eastern Europe, countries such as Croatia, with its sunshine and sandy beaches, could become the new Costa del Sol. Bulgaria and Romania with their Black Sea coast and ski-resorts are also gaining popularity with British buyers.
The property boom is spreading further east to Montenegro, formerly part of Yugoslavia, with its unspoilt forests, mountains and Adriatic beaches. Turkey is already a hugely popular summer tourist destination and seems certain to develop its ski resorts.
As EU membership becomes a closer reality, property investment in ski resorts is likely to blossom. Even the Ukraine, Russia’s southern neighbour on the Black Sea coast, is becoming sought-after.
Much of this economic growth in the region is being boosted by foreign investment. The availability of cheap labour means that many multinationals are keen to invest by basing their European manufacturing sites in the region. Poland is experiencing massive growth in industrial production and Slovakia is set to become the car-building centre of Europe. The resultant increase in local wealth is pushing up property values.
Many more foreigners will be looking to live and work in the former eastern block, putting pressure on housing supply. Investment in new properties in the region is badly needed. Post-war communist housing, cheaply built, is starting to crumble, creating a lack of housing stock. Demand for housing is high, with an estimated two-thirds of the population of the eight countries needing to be re-housed in the next 20 years – that’s more than 24m people looking to rent or buy a home.
You can still get a lot for your money in these emerging European property markets. With low levels of home ownership in many countries, coupled with low interest rates, house prices look set to boom. As mortgage finance becomes more widely available to local buyers, prices will increase and investors are likely to be able to sell on or rent at a considerable profit.