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British Investors Less Interested in U.S. Property Than Previous Years - 27 July 2010

Foreigners poured $41 billion into the U.S. property market over the last fiscal year, up from $39 billion the year prior, according to recent reports.

However, the study, conducted by the National Association of Realtors, found that while buyers in Canada and Mexico are spending more on American property, investment interest has waned among the British.

U.K. investors made up only 9 percent of the total U.S. purchases by foreigners between March 2009 and March 2010, down from 10.5 percent the year before. This is the first time that Mexican homebuyers—making up 10 percent of the total; Canadians made up 23 percent—have superceded the British in property investment in the U.S.

The drop in British interest may be attributed to several factors, experts say. About 34 percent of foreign buyers were unable to complete purchases because of financing, according to the study. While the subprime mortgage catastrophe has caused a lot of homes to go into foreclosure in the U.S.—therefore creating some deals that are 50-percent lower than their pre-recession value—banks are less likely to grant loans to both domestic and foreign buyers. Instead, homebuyers are expected to pay a large percentage of cash up front.

Also, since the American market isn’t expected to turn around any time soon, investors have to think long-term and rent out their properties, which can be difficult to do from abroad. Condos in Florida and Hawaii have been found to better investment choices, according to experts, since many developments have an onsite manager and these places remain top holiday destinations.

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