Posted by Oliver Meredew on January 5th, 2016.
2015 might be done and dusted, with New Year’s celebrations recently ringing in 2016, but unfortunately circumstances in the UK property market haven’t magically changed for the better. The price of housing in the capital remains astronomically high compared to other parts of the UK, so why not push the boat out all the way and invest in property abroad?
Property conditions in the UK may not be about to improve, despite the government’s recent fast-tracking of the construction of affordable homes, but across the globe, forecasters have been weighing in on the markets to watch out for in the year ahead. In this article, we’ll take a look at the prevailing winds that property experts are expecting in the months to come, covering a range of countries and opportunities in the process.
Starting relatively close to home, Spain has always been a highly popular tourist spot for UK nationals, but for those looking for a larger investment than a week or two in the sun, the Iberian nation is set to have plenty to offer prospective property owners and developers in 2016. The perennially popular Costa del Sol has remained a solid bet for investors since tourism to the area began in earnest, but in particular, forecasts are for a resurgence in prices in the regions of Andalucía, Castilla-La Mancha and Navarra, as well both the Balearic and Canary Islands.
However, an unusual caveat to these forecasts has been that house prices in the central city, Madrid, actually slid by a small amount over the course of last year. Predictions from BBVA, one of Spain’s largest banks, have generally been optimistic for 2016; the bank expects the property market to be stable with growth in a number of coastal regions as well.
Moving further afield, the United States has recently seen an economic change which has affected both housing and property prices in the immediate aftermath. This has been the Federal Reserve’s decision to finally raise the US interest rate for the first time since 2009, something that the central bank enacted before Christmas 2015.
Although the financial crisis of the late 2000’s was undeniably hard on the US economy and its property markets, the nation has made major strides towards putting itself at the forefront of the world’s property markets, with real estate prospects looking highly favourable for the course of 2016. According to industry experts PricewaterhouseCoopers (PWC), the states of Florida, Texas, California and Washington are all topping the leader boards as areas to invest and develop in, with the individual cities of Seattle, Dallas, Austin, Charlotte and Atlanta heading the list of precise locations that PWC sees as the most favourable.
Heading down into South America, Brazil is set to become a world focus in 2016, in more ways than one. The big pull for global attention will naturally be the 2016 Olympic Games which take place in August, but according to forecasts, it may be worth looking at the South American giant for more than just sporting events in the coming months.
With the Brazilian Real taking a major dive in value last year, there has never been a better time to invest in the country’s property market as this effectively provides a sizable discount to overseas investors looking to grab a bargain. Going back to the Olympics, while temporary, this event may bolster the long-term appeal of Brazilian property, just as it has done for London and other host cities of the prestigious games.
While Brazil’s property prices have recently taken a hit, this has only meant good news for investors looking to get their feet on a more exotic ladder, as given the circular movement typically shown by economic markets, this can only correlate with prices rising once again over the medium to long term.
The Australian property market is in a similar situation to Brazil’s, although according to industry experts, the price slump it still yet to come. The Domain Group has forecast fairly marginal price growth Down Under in 2016, especially in Sydney and Melbourne, where respective increases are expected to be limited to 4 and 5 percent. While this is bad news for owners looking to sell, when the slump is at its peak (or prices are at their lowest, if you prefer), investment in Australian property may just bring about a sizable gain for those that choose to take the plunge.
Finally, Japan can be considered a ‘safe bet’ when it comes to netting a healthy return on investment, as the market is highly developed and provides a great deal of liquidity. Peter Manda of EY has identified that while Japanese cities are currently blighted with a vacant property situation approaching crisis levels, this has nonetheless created a glut of opportunity for savvy investors.
Thanks to government measures passed last year that allow the destruction of derelict or otherwise dangerous properties in many of the nation’s largest cities, the construction of new, affordable housing is expected to revitalise areas across the country. As a consequence, a previously sparsely populated neighbourhood may instead become a bustling community centre, where the right service or building in the right place could pay off in considerable dividends for those with an eye for the needs of the future.
So there you have it, the property hot spots to be aware of in 2016. If you’re looking to invest in overseas property, considering one of the locations listed above could help improve your return in the long term.
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