Are These European Property Markets Still In Bubble Trouble?

Share Article

Colordarcy.com highlight analysis from Deutsche Bank and the OECD (June 2012) which has revealed that the price of property in Spain and other European countries may need to fall a further 25% to reach fair value

European-property-markets-overvalued

European property markets - are they still overvalued?

While I would not rule out investing in Spain or some other European countries on the strength of this alone, it does highlight that investors should be looking for a 25 to 30% discount off the value of property

Property investment firm Colordarcy.com are suggesting that investors should think carefully before investing in European property that is still considered over overvalued.

The research, centred on a chart put together by Deutsche Bank and the OECD, which looked at price to income and price to rent. Surprisingly, despite significant falls in prices already, Spain property still has some way to go before it falls to roughly where it should be in terms of value both for rent and for price to income.

If the chart is correct, the ratio would need a readjustment of around -25% before fair value is reached. Even more surprisingly, a lot more could be taken off the value of UK property before it returns to ‘fair value’.

Loxley McKenzie, Managing Director of Colordarcy.com commented; “While I would not rule out investing in Spain or some other European countries on the strength of this alone, it does highlight that investors should be looking for a 25 to 30% discount off the value of property within those countries before they begin to look attractive."

On the other hand, U.S. property shows up as outstandingly good value when it comes to price and slightly less so when it comes to rents, however the latter is certainly a bonus for landlords. It could be concluded that from countries in this sample that the U.S property market comes out on top for investors.

In fact it is the only country included in the study that realistically offers investors the perfect package.

By investing in USA property, investors are getting a nice cocktail of rents that are higher than they should be and properties prices that are nearly 15% below the value they should be.

At the other extreme, investors might be in a pretty perilous position now if they were to invest in countries like Norway or Belgium, with prices nearly 30% above what they should be according to the measures used by the bank.”

According to Colordarcy.com, it is more important than ever to opt for heavily discounted property in Europe in areas where there is high rental demand.

In the U.S meanwhile, investors can be confident that with property values falling so far from their peak and rents high, this will be the easiest market to find property that pays for itself and keep investors out of bubble trouble.

Notes to the editor:

Colordarcy is a leading property investment company that specialises in finding positive cash flow investment properties worldwide. Colordarcy investment property portfolio includes some of the best properties for sale in Brazil, Florida, Turkey and the United Kingdom.

For more information, supporting pictures or logo artwork, please contact:

Steve Billing
PR Manager

Tel: +44 (0) 207 100 2393
Email: press(at)colordarcy(dot)com

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Steve Billing

Loxley McKenzie
Visit website