The 5 Worst Property Markets Of 2012

Worst Property marketsIf you’re a property investor, it is my guess that apart from a few outposts like Brazil, Turkey and Florida, you will be glad to see the end of 2012.

At least we can now look forward to 2013 with property still the number one investment choice for financial gain – unless you invest in our 5 Worst Property Markets of 2012 that is…

5. Ireland

In Dublin, there are actually some signs of life emerging for those investors with cash. Dublin prices are now 55% down from their peak so they can hardly fall further and most analysts agree that the city has now hit bottom.

Don’t expect an exit anytime soon though; it is virtually impossible for families with one income to get a mortgage, unless that person earns €100,000.

4. Portugal

Property in Portugal remains expensive in comparison to its neighbour Spain, even though it is one of the toughest countries to obtain a mortgage and it has one of the worst economies in Western Europe.

Flat prices fell 10% year-on-year to May 2012 and overall Knight Frank reported a 7.9% year-on-year fall in property prices between 2011 and 2012.

3. Greece

Petrol bombs, rioting in the streets, a quarter of the workforce unemployed, this is the stuff of property investment nightmares. Anyone who ignored our advice in last year’s worst property markets report may well have seen their property value fall 9% in the first quarter, 10% in the second and 12% in the third.

Greece like most struggling countries in Europe is still in denial as the government struggles to find a formula that the population of the country can swallow and fellow EU states like Germany can tolerate.

2. Slovenia

Back in 2007, Slovenia was touted as “Europe’s Best Kept Secret” as most East European countries were back then. Unfortunately the curtain seems to have been drawn on this small picturesque country that was once behind an iron curtain as part of Yugoslavia.

Data on Slovenia’s property market is extremely patchy. The most recent statistic comes from Q1 2012 when prices were 4.9% down on the previous year.

A major problem is currently brewing in Slovenia relating to property values used for debt insurance. The banks are struggling to come to terms with it and admit that the value of property has been blown out of all proportion.

1. Netherlands

The Dutch economy shrank 1.6 % in the 3rd quarter of 2012.

Apartment prices fell by 8.2% and all the indications are that we have not seen an end to the crisis. Dutch home owners have some of the highest mortgage debts in Europe, so the falling value of homes is a real cause for concern as is unemployment at a 15-year high.

The Netherlands is our worst property market this year because we really can’t find a single reason why anyone could have gained anything from investing in this market in 2012 or 2013 for that matter – not even a sun tan.

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Do you agree with our 5 Worst Property Markets? Please leave your comments below.

Kind Regards

Brett Tudor
Property Expert

Loxley McKenzie’s View

When I look back on 2012, it was in many ways worse than 2011 for most countries in Europe.

At the very least, investors should be looking to invest in countries that have a stable economy, good capital growth prospects and a reliable rental market. They also need the mortgage finance and this was in very short supply, even in countries like Portugal.

To put it in simple terms, a property should be an investment that will pay for itself. If your incomings don’t cover your outgoings, then it will be a bad investment and this is something that many people will have experienced in our five featured countries in 2012.

It comes as no surprise to me that all our top five countries are in Europe as governments have struggled to cope with mounting debt, even though they won’t admit it publicly.

They had to maintain a tricky balancing act between the need pay back their debts as well as keep their populations from rioting on the streets. Some failed as we saw in Greece and Spain.

I expect 2013 to be another challenging year for portfolio property investors, however there are some signs of life returning and areas of the world offering something far more exciting than what we are currently seeing in the EU.

The USA and Turkey are now firmly on investors’ radar again with unprecedented opportunities to invest and gain the kind of returns we haven’t seen since 2006. Now is the time to be greedy while others are fearful in these markets.

That said, understanding the market you invest in is just as important as ever as is doing due diligence on developers. This will give you every chance of success in your property investment adventure.

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