By EWN •
Updated: 17 Oct 2022 • 14:15
If you’ve been toying with the idea of purchasing a second property in Europe, be it for holidaymaking or investment purposes, now’s the best time to set your plan in motion and actively start searching for the right destination. Because as you may already know, location is one of the main factors to take into consideration when buying a house.
With its rich culture, breathtaking landscapes and amazing cuisine, The Old Continent boasts a wide variety of eye-catching holiday hotspots, so it’s no wonder purchasing European properties has always been an extremely appealing endeavour for real estate investors from all across the world. Now that Europe’s luxury housing market is on a rising trend and rental prices on the continent continue to increase due to high demand, the prospect of buying a house in one of Europe’s most sought-after destinations is all the more tempting.
However, you should not forget that regardless of how you intend to use the property, purchasing a second home in Europe represents a major investment, and you want to make sure you’re making a wise decision and getting your money’s worth. Keep in mind that finding a home that checks all your boxes can be a very time-consuming task.
In most cases, you’ll need to make certain improvements and alterations to ensure the property meets your requirements, usually in the bathroom and kitchen areas. As expert manufacturers at Kitchen Warehouse Ltd explain, you can significantly cut down remodelling costs by shopping around and only investing in the necessary pieces instead of having a full overhaul. Still, all these expenses will add to the final bill and increase the financial burden.
But until you get to home renovations and revamps, you have to figure out where to start your search and what European destinations you should focus your attention on. Fortunately, the latest research from international real estate agency Knight Frank can serve as a source of inspiration and provide a great starting point for your house hunt.
If you want to buy a second home to diversify your investment portfolio with real estate assets, know that Western Europe is ripe with opportunities in this regard. Compared to other parts of the world, the luxury real estate market in Europe has done surprisingly well in the past year, registering a significant increase in property prices, based on the report’s findings.
However, the trend has not impacted all European cities equally, as some destinations have experienced higher appreciation rates than others. Germany’s capital, Berlin, seems to be at the top of the list of cities that have seen property prices rise, with a 12% increase over a twelve-months span leading up to June 2022. By comparison, other major cities in the world, such as New York, London or Hong Kong, had much lower growth rates, between 2 and 7 per cent.
This doesn’t mean everyone should flock to Berlin to search for their ideal investment property. There are other European cities with similar appreciation rates that are worth exploring, like Edinburgh, Zurich, Dublin or Paris.
It’s true that the global real estate market has cooled off recently after an unexpected acceleration that saw prices reach record levels during the pandemic. That’s mostly due to the rising interest rates that are limiting household debt margins and the mounting financial pressures that come with economic decline. However, this shouldn’t discourage you from buying a second home in Europe. According to the study, these developments have not yet impacted property prices in Europe, and the prime real estate sector, in particular, has been sheltered from any negative effects.
Still, you should do your due diligence and consult a series of variables that may affect your purchase before making a final decision. That includes checking foreign exchange rates, the fees and taxes you have to pay when buying the property, as well as the predictable ongoing expenses in the region.
If you’re looking to purchase a second property as a holiday home that you can rent for the rest of the year when you’re not using it, you should turn your attention to Europe’s idyllic holiday destinations.
There are plenty of beautiful properties in stunning locations all across Europe, but not all of them are holiday rental material. Apart from visual appeal, you also have to make sure the house is conveniently located close to important amenities and ensures easy access for tourists. Another important aspect to consider is the demand in the region. For a property to provide constant income as a holiday rental, there has to be year-round demand.
That being said, the destinations that seem to meet all the requirements are the ones that have always been high on tourists’ bucket lists. Tuscany, Provence, the Frech Alps, and the Balearic Islands have been attracting tourists from all parts of the world like a magnet due to their incredible natural beauty and unmatched charm. Therefore, a house in any of these regions could turn into an amazing holiday home and a potential gold mine as a long-term rental.
Statistics also point in this direction. Property searches in Tuscany increased by 30% last year. Although house prices in popular Tuscan towns can be very expensive, this is where two-thirds of home buyers in Italy look for their next home.
If you’re into locations that are a little bit off the beaten track but can still provide a good return on investment, you might want to explore properties in Sardinia, Funchal, Formentera, or Andorra la Vella.
Europe is, without a doubt, a place of immense beauty filled with hidden real estate treasures. So, if you’ve set your mind on purchasing a second home on the Old Continent, patience and careful research are required, especially now when the competition in the area is getting more intense. Who knows, maybe you’ll find your future home in one of the destinations we’ve mentioned.
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