With UK prices staggeringly high during 2007, many would-be buyers ventured outside Britain to get on the ladder, invest or shop for a holiday home. However, the autumn’s credit crunch brought with it uncertainty regarding property investment – and that includes overseas purchases. What will the overseas market be like in 2008? And where will the hotspots be? Property Secrets’ chief analyst Simon Tweddle says Central and Eastern Europe will be front-runners – and the Czech Republic city of Brno, in particular – will be the hottest locations for investors.
It is true that investors have cooled in the wake of the Northern Rock fiasco, he says – however, he wants to ‘reassure investors that property is still a very viable option’. First, the UK: Tweddle says the domestic market ‘will see decelerating with high prices, possible economic difficulties and a tightening credit environment [meaning] further high growth is not possible. Average growth is likely to be above 0 per cent helped, by a healthy market in the south of the country.’
London price growth will be between two and five per cent in the year, he forecasts. In Poland Tweddle predicts Katowice will be the winner, with major cities ‘taking a breather’. Third-tier cities, he says, are priced low and should see some growth. In Slovakia, Bratislava looks an excellent bet, he says, predicting that prices will rise by 15 per cent; in Trnava, ten per cent. The Czech Republic still has a strong economy, and Prague is expected to see a very healthy 25 per cent acceleration. Brno should see 30 per cent growth – ‘It’s booming right now’, he says, with high demand for low stock resulting from low prices. Romania, now an EU member for one year, has seen the market accelerate strongly.
‘Bucharest, the capital of booming Romania, is attracting huge amounts of FDI,’ he says. 'Unemployment is around 2.5 per cent and wages are rising rapidly. Expect high price growth rates for the next two years.’ Bulgaria, Tweddle says, has been hurt by overselling on the coast, ‘though now the cities are starting to look like attractive investment locations’. Sofia should see growth of between ten and 20 per cent. Elsewhere in Eastern Europe, ‘The Latvian economy has seriously overheated. Mortgage lending has started to become much more restrictive and the economy is in danger of coming off the rails.’ Prices have peaked in Riga, he says. In Lithuania, meanwhile, ‘there is little room for growth’.
Estonia’s economy ‘continues to boom and like its Baltic cousins its starting to have to put the brakes on to prevent the economy overheating. It’s a risky market now with not much room for growth.’ Hungary, says Tweddle, is suffering from both economic and political difficulties. ‘Mortgage finance is poor and there a few prospects for growth in the short term.’ Slovenia is ‘burdened by regulation’ with finance still not widely available to foreign buyers. And Croatia, although improving in its fiscal health, ‘still [has] some way to go before EU membership. Mortgages are not available to foreigners.’ Prices in Zagreb should show 15 per cent growth, he predicts.