British Property Seen As A Haven of Safe Investment
A Greek tragedy or a Greek comedy?
Or both? Nobody who loves Greece and its people can fail to be saddened by the economic woes that have afflicted the country in recent months. Equally, the knock-on effects of the Greek debt crisis on the European property market have had a slightly surreal quality.
The deeper Greece gets into debt, the more the Greek super-rich have been looking for a safe haven for their money, with London as their prime target. The Russian voices that used to be audible from Harrods to Marble Arch are now punctuated by unmistakably Greek accents. To the moneyed classes in Athens, London looks like a good bet.
They are looking for long-term investments as well as footholds in the London market.
And that must be a good thing for british property, sold in good old-fashioned Pounds, not Euros. In the 12 months to May 2010, the Greek share of the foreign-owned £2 million-plus property sector in London doubled from 3 to 6 per cent.
The Pound is weak - But That's a Good Thing!
The Pound is weak. While that’s bad news for any Brits who need to travel overseas on pleasure or business, it means homebuyers have enjoyed a ‘double whammy’ from the Bank of England’s strategy of holding interest rates at a historic low of 0.5pc for 28 months. Not only has that kept mortgage costs down but it has also kept house prices high by attracting foreign buyers.
That compares to prices weakening in places like the Greek islands.
“Greek House Prices Will Drop About 15% in Next Two Years, Fitch Predicts”
That’s what they thought at the beginning of 2011. As interest-rate increases made it harder for borrowers hit by austerity measures to keep up with mortgage payments, they predicted trouble ahead...
“It seems likely that increased arrears will begin to result in increased defaults,” Fitch analysts said.
Well, they were right, but things got a little worse than that, as we know. According to reports, prices of luxury properties on the Greek islands are being slashed by up to 45%, as owners look for quick sales to avoid paying the higher taxes of the government’s new austerity measures.
And hence we benefit. As the Eurozone struggles, and the pound stays relatively weak, so our property’s appeal grows, particularly perhaps in London, but what happens there will usually trickle down into the West Country, hence keeping our market buoyant.