Since the stock market crashes of a few years ago, more and more investors have looked to real-estate for their futures. The only problem is for the average mid income investor, its difficult to come up with enough collateral for that second purchase. Another worry is making the monthly payments if it does not rent as easily as expected.
The home markets of the USA and the EU have long been too expensive for most second home investors, but with the advent of EU expansion, the new markets of the central and eastern European countries are opening to outside investment. Cities such as Prague, Budapest, and Kracow are fantastic centres of culture and historic architecture. They are now experiencing a property boom the like of which has never been seen before.
Properties in Budapest, Hungary's beautiful capital have seen a steady increase of 20-25% capital growth over the past 5 years, and prices are still 25-30% of the cost of similar western european options. rental opportunities are very good, with returns of up to 12% per annum. Thats a huge $6000p/a per $50,000 investment. With home mortgage markets running interest rates at up to 30%, the local population either need cash, or cannot buy their own homes. This is all due to change with the advent of the single currency, the Euro. When these countries meet the criteria for full EU membership, they will also have a fixed currency, and standardised EU interest rates, currently at under 3%. Mortgages will then be affordable, and prices are expected to skyrocket. Overseas buyers can avail of EU mortgages at 3-6%.
How then are the prices increasing at 20-25% per annum? There are two main reasons, eastern European ex-pats working in the west and saving for their homes. A vast influx of wealth generated in the western EU is going into the fashionable districts in Budapest. When Hungarians overseas can purchase their dream apartment in their capital city for €80,000 or $102,000, they can get loans in their country of work and pay these prices off within 4 years. The second source of income is from overseas property speculators. Estate agents are forecasting 45% of all transactions this year are with overseas buyers.
Now is the time to invest, when they sign up to the Euro, it will be too late.
Written by
Richard Doleman
overseas mortgages at www.eumortgagelink.com
Overseas and foreign mortgages for investors in the new europe and the world. We offer mortgages and advice on over 40 countries and cities including budapest, spain, bulgaria and many more. For property investment see www.euinvest.ie