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Away from the herd - 7 October 2008

Posted by Paul Collins No comments

This morning I am on a train back to London from Manchester, and the person beside me is avidly reading one of the leading overseas property magazines. Not only has he bought the magazine, but he appears not to be concentrating on just one area, country or subject. Surely he must know there’s a credit crunch going on?

This is not an isolated incident – last weekend, BuyAssociation.co.uk had a stand at the A Place in the Sun Live exhibition and the show was far more of a success than most had predicted. While it was undoubtedly smaller and less well-attended than previous exhibitions, the atmosphere of confidence and optimism coming from both visitors and other exhibitors was both unexpected and inspiring.

So why is it that the overseas property market seems to be faring at least a little better than the UK? Surely some of it has to do with the immediacy of the problems facing the UK house building industry. Buying overseas allows one to have a degree of separation from the mundane realities of the property market here. Many buyers of property overseas seem to see their UK property as more of a necessity, and reserve their interest and excitement for their dream of buying overseas.

There is also doubtless some aspect of emigration about it as well. If you are in the UK property market, there seems to be no escape from the gloom and troubles in estate agents and development sales offices no matter where you go in the country. For many people, buying overseas is something they see as their way of escaping from the reality of life in the UK with slowing economy.

While this is a valid point, and there are indeed countries in Europe and beyond that have better economic circumstance than we do here in the UK at the moment, it would be wrong to assume that this will continue indefinitely. This weekend alone has shown how quickly a banking institution can be undermined by its previous borrowing record and a lack of confidence in its future prospects.

Even mortgages in Euros and US Dollars are likely to soon face the squeeze, so while it is great to have confidence in the future of the overseas property market, and in the long term that confidence is more than likely to be rewarded, it is still vitally important to go into any deal with your eyes fully open. In fact this has always been the case, but in the past market conditions have meant that people who have made rash and unresearched judgments about property overseas have been able to get away with their decisions.

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