Are expats still buying property abroad?

Published 2020-11-30 13:03:38
Hand agent with home in palm and key on finger - Background photo created by ijeab -

2020 is a year that will be surely remembered in history. Countries have shut down one after another, and many activities have stopped, while some trends and developments already taking place in our society pre-Covid-19 have been enforced and speeded up, such as remote working. We've jumped several years into the future regarding aspects such as digitalization. The Coronavirus pandemic has in many ways accelerated existing societal trends, but it is also leaving a significant mark on the world of property.

Interest for overseas property was hitting records this summer according to the number of visitors on Rightmove Overseas. Spain, France, Portugal and Italy remain the favourite destination for expats. Tim Bannister, Rightmove's director of property data, commented:

"Increased competition for second-stepper homes has pushed prices to a record for those looking to take the next step up the ladder. Needing more space has always been the most popular reason for moving house, but now there's a new urgency for extra space to be able to work from home, which means that there are different sets of buyers competing for the same type of property. At the start of the year a fourth bedroom was very much a luxury for buyers trading up, but it's now emerging as a must-have for those who are able to take that step. With overall asking prices just a few hundred pounds shy of July's record, and buyer demand at an all-time high, those currently looking for their next home are likely to find that only offers close to the asking price will be considered, especially for larger homes."

Despite Covid-19, the property market is booming

In the US, property sales were 10.5% higher in August 2020 compared with August 2019. CNBC reported that this is the highest sales pace since December 2006, before the Great Recession (the economic downturn from 2007 to 2009). Sales of existing homes rose 2.4% to a seasonally adjusted annualized rate of 6 million units, according to the National Association of Realtors.

In the UK, there was also a rise in the property market, largely fuelled by the government temporarily cutting stamp duty, explained the British consumer magazine Which?. The cuts are different in each country forming the UK, but they mean buyers could potentially save up to £15,000 in tax if they move home before April 2021. Despite the lockdown measures currently in place, in England, Scotland, Wales and Northern Ireland, the property market remains open. While some estate agents began offering video house viewings, many are still conducting in-person viewings. Data from HM Revenue and Customs shows that 105,630 property sales went through in October, the highest number recorded in a single month since 2016.

Swedish properties are also experiencing record high interest from overseas investors, with areas outside the larger cities the most in demand.

Moves to subburbs and foreign investment are boosting the market

A new report from property consultancy Newsec, shows that the coronavirus pandemic has accelerated and strengthened several market trends. During the year, several ongoing trends have developed at a pace that actually should have taken significantly more time, said Max Barclay, the Nordic head of Newsec. The report shows that foreign investment reaches new highs in Sweden:

"In 2020, foreign investors have accounted for 35% of the total transaction volume. This is the strongest level for foreign investment since before the financial crisis of 2008. Foreign investors on the Swedish market have heralded from a wide range of countries, but the year has seen particularly strong growth in inter-Nordic investment, i.e. investors from Norway, Finland and Denmark. Indeed, investors from these countries have accounted for close to 75% of total foreign investment volume in 2020, which could be a result of Nordic investors choosing to invest in markets they are well-acquainted with, when the going gets tough. Nevertheless, substantial interest in the Swedish market has also been shown by e.g. American and German investors in 2020, and foreign interest in general looks set to remain high throughout 2020."

In other Nordic and Baltic countries, there was no significant rise in the property market, but the numbers stayed the same, proving that the pandemic didn't have a big influence in this sector.

Specific schemes to attract overseas pensioners

Greece had an increase in property interest, after it enabled retired expats to pay less tax. Similar schemes have been introduced successfully by other European destinations, including Portugal, Cyprus, Malta and Italy.

In order to qualify for this specific fiscal scheme, overseas retirees had to come from a country that has a double-taxation treaty with Greece, such as the UK, prove their pension status and agree to spend more than six months in the country each year. In addition, they could not have been a tax resident of Greece over at least five out of the six financial years before their tax relocation.

Acquiring a second home post-covid

A report by Knight Frank shows that over a quarter of respondents are more likely to buy a second home as a result of the pandemic.

One in four survey respondents said they were more likely to move home in the next 12 months as a result of the pandemic. Most respondents who said they were more likely to move in the next 12 months are seeking a different property in the same location (40%). Some 26% are seeking a different property elsewhere in the same country and 34% of those considering a move are considering a purchase abroad (9% of all respondents).

The UK, Spain and France top the list of preferred destinations, followed by Australia, Canada, Switzerland and the US. Such countries offer a good quality of life, political stability, a secure currency, top quality education systems and in normal times are easily accessible. New Zealand, Portugal, Malta and Norway also ranked highly.

When it comes to motives, upgrading the family's primary residence ranked highest as the main reason for purchasing. Interestingly, improved access to quality healthcare ranked second – and it is no coincidence that good healthcare is another common denominator of those countries listed as preferred destinations. Acquiring a holiday home in the sun, came third overall as a reason for purchasing a new property and business or employment reasons ranked in fourth place.

There is still a lot of uncertainty surrounding this pandemic and how the Covid-19 virus will impact the property market. One thing is sure though, people start to reconsider their priorities in terms of housing. And considering the fact that remote working is becoming the norm for more and more companies, expats are thinking about buying properties abroad, now more than ever.

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Author: Oana Tamas
I am passionate about life. Nature, people, art and everything that is making its magic on this beautiful planet, is worth our attention. I believe that communication is the key of life and wellbeing.

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