International Property Market Report 2007
Where did British people buy in 2007? How much did they spend? AIPP's report provides some answers.
Where did the British people buy in 2007?
Despite some people doubting its future in the international property market and some negative press coverage, unfair at times, Spain has yet again come out on top as the number 1 destination for British people buying property abroad in 2007, according to annual research conducted by the Association of International Property Professionals (AIPP).
25.4% of properties purchased overseas by British buyers in 2007 were in Spain. Further proving the enduring attraction of the established names, France was again the second most popular country, taking 17% of the market. When you add in the 3rd most popular, the USA, at 9.7%, it is clear that once again the established destinations are holding up well against the huge number of emerging markets (these 3 alone taking 52.1% of the market).
‘This is such an interesting time in our market,’ said Paul Owen, Chief Executive of the AIPP. ‘We have Members across 26 countries and they are selling in approximately 45-50 countries. The choice available to the buyers is vast but big markets, even fast-changing ones like this, are relatively slow to make enormous shifts. When we add in other established markets like Italy, Portugal and Cyprus, nearly 2/3rds of property purchases last year were in established, familiar markets.’
The sands of time are ever-changing though and the rise of new markets does threaten the status quo. Bulgaria has almost been the sole significant trailblazer as far as the concept of new markets becoming established is concerned. 6% of purchases by British buyers were in Bulgaria last year according to this research.
‘Bulgaria had almost a free ride as the ‘emerging market’ for 2-3 years,’ continued Owen. ‘It certainly made the most of it as it quickly grew market share. What is interesting in the figures for 2007 is that it has held up pretty well in the face of so many new entrants in the ‘emerging market’ category.’
The figures collated by the AIPP are for completed property transactions, not for deposits paid. Does this make them out of date?
‘We have said from the beginning that we will publish figures that can be verified,’ explained Owen. ‘The only true indicator of purchases is the number of completions; it is at this time that owners take the deeds to the property. Our job is not to predict but to report on the market and reflect on it.’
The rest of the top 10 destinations for British buyers is a combination of new and established markets. The most noticeable new name is Morocco (in 5th place) with 4.9% of the market, very slightly ahead of Dubai at 4.8% (in 6th place). The final emerging market (in 10th place) is Turkey with 2% of market share.
Sandwiched between these new names and taking places 7 – 9 in the top 10 are Italy (3.7% of market), Portugal (3.6%) and Cyprus (2.9%), all three showing an increase in market share from 2006.
How does 2007 compare to 2006?
‘With over 53,000 actual purchases in our survey, we’d expect the figures on the market share of each country to be accurate as well as the average spend on overseas property,’ said Owen. ‘What is devilishly difficult to estimate is the total number of purchases and, thus, the total amount of money spent by Brits on overseas property. However, the size of our survey and our knowledge of the market give us 2 very good indicators.’
Both Spain and France are down as regards year on year market share despite holding on to the top two spots: Spain had 31.6% of the market in 2006 (down 6.2% in 07) and France 18.9% (down 1.9% this year). Bulgaria is also a little down (7.7% of market 06 compared to 6% 07).
On the rise for market share is the USA (up by 2.2% to 9.7%), as well as all other top 10 countries for whom year on year figures are available: Dubai up to 4.8% from 1.5%; Italy up to 3.7% from 2.8%; Portugal up to 3.6% from 2.6%; and Cyprus up to 2.9% from 2.5%.
Size of the market
The average spend by British buyers on an overseas property in 2007 was £99,200, according to the AIPP research, up just 1% on the average spend in 2006 (£98,166).
‘We suspect that the wealth of destinations, many in ‘new’ markets with low entry prices, is keeping the average spend at a consistent level,’ explained Owen. ‘The figures show that around 30-35% of the money spent on overseas property is in emerging markets and the prices in many of these destinations, as an average, are lower than the established markets.’
As for the total size of the market in 2007, the AIPP estimates that there were approximately 242,000 completed purchases of overseas property in 2007 by British buyers, up 21% on 2006. With an average spend of £99,200, this means that £24 billion was spent in the market last year by British buyers.
‘Like all respectable attempts to calculate market size, we look elsewhere to corroborate our figures,’ Owen added. ‘Unfortunately, there are not many reliable, up-to-date sources. Each time we realise that, it provides the Association and our Members with another reminder of the market need for our research.’
The Office of National Statistics (ONS) reports that 207,000 Britons left the country in 2006. Unfortunately, more recent data is not yet available.
The AIPP did take these figures as some guidance, albeit qualified. Owen explained, ‘Despite the fact that the ONS figures are, by their very nature, provided retrospectively, they can still inform our research. Our figures showed in 2006, for example, that British people purchased 200,000 properties overseas in 2006 (the same year as the ONS figures quoted above). It is reasonable to conclude that the ONS figures support our figures.’
With 207,000 Britons moving overseas in 2006, many of those taking their retirement overseas rather their children, it is expected that between 60,000 and 70,000 properties overseas would be needed to house them all. Taking into account the many thousands of holiday homes and the ever-growing market of ‘investment’ properties overseas, 200,000 properties purchased overseas by British buyers in 2006 is probably, as the AIPP said at the time, on the conservative side.
The veracity of AIPP’s 2007 figures may be confirmed by ONS figures in the future though the data assessed by the AIPP differs considerably and the two are not necessarily inextricably linked.
‘Whilst we recognize the difficulty of correctly assessing the size of this market, there are few, if any, more reliable sources than the AIPP,’ concluded Owen. ‘We would expect other data, released retrospectively like the ONS, to support our research.’
Regular, reliable, independent reports
When AIPP was first set up in early 2006, there was a report on the international property market in the national press. The sources (all claiming to be definitive) gave figures ranging from 250,000 to two million overseas properties owned by British people. It was a very clear indication of a market in need of balance, independence and authority.
In a market devoid of authority or independence, the AIPP’s figures will become definitive and provide official market data that is long overdue.
‘The market needs factual data. The AIPP will not do predictions, conjecture, up and coming hotspots etc. Our figures will reflect what has happened each year and we will leave the crystal ball to others.
‘Previously, there has not been an official body with the time, knowledge and desire to produce the information; the AIPP fills that void,’ concluded Mr Owen.