Byline: KATE GRAHAM
The news from the property market for potential first-time buyers has been so much doom and gloom that it is little wonder so many of them have decided to stay at home with Mum and Dad instead. But now some first-timers have found a solution - to buy abroad.
Three years ago, when William Lecheur, 28, a business development manager for a ski company in Lymington, Hampshire, realised it was nigh on impossible to get on the UK property ladder, he bought a house in France which has since risen in value by ten per cent. But there are psychological benefits to owning a home too, he says.
'Everyone in Britain seems obsessed with buying houses; there are so many property programmes making it look really easy. If you are nearing 30 and do not have a property asset, you really feel you have failed.' With more than 60 per cent of his friends owning properties by their mid-20s, William felt the peer pressure: 'Especially when many of them were not big earners. They simply scraped the money together with a partner, bought a one-bedroom flat and suddenly saw huge financial returns.' When his dream buy-to-let home in Lymington fell through in 2001, William realised that a reasonable job and deposit were just not enough. He is not alone - the average age of first-time buyers is now 35, compared to 32 in 2002. Nine out of ten first-time buyers in London are over 25.
Ten years ago, first-time buyers made up 55 per cent of all mortgage borrowers; they now represent 31 per cent, according to the latest figures from the Council of Mortgage Lenders.
William fell for a well-placed plot of land in St Cyprien, near Perpignan, and now owns a property he could only dream of at home.
'It's a two-bedroom apartment with a garage, cellar and views of the sea, mountains and gardens. The property cost me [pounds sterling]70,000, which in London would not buy a garage.' PR consultant Clare Macnaughton, 33, agrees the psychological benefits of home ownership are important. 'Buying is what you are supposed to do in Britain, it's considered a rite of passage.
'Thirty is a turning point,' she continues.
'My generation spent their 20s partying and having gap years, but at 30 you finally want to lay down roots, and that means a pension and a property.'
Convinced the market was due for a downturn, Clare and husband Kai, 35, who works for the RAF, invested their [pounds sterling]30,000 savings in Premium Bonds, only to see properties shoot out of reach.
Living in rented RAF accommodation in Hampshire, househunting took its toll.
'We felt totally despondent. Despite two good salaries, we couldn't buy a property we wanted. We wanted an emotional return from our investment as well as a financial one. You just do not get the wow factor from pieces of paper.'
Then, in August 2002, while searching the internet they stumbled upon a villa in St Julien in the Limousin region of southwest France. 'It was our dream house - 6,500sqm of gardens, a swimming pool and a detached, six-bedroom villa.' They snapped it up as a buy-to-let investment for [pounds sterling]100,000.
First-time buyer and PR consultant Angela Spain, now 30, invested in a three-bedroom house in New Zealand when she and data analyst fiance Jeremy Clark, also 30, realised their property dreams were hopeless.
'We'd spend our weekends gazing through estate agents' windows in Chalk Farm, North London, where we live, but when we worked out the deposit, we realised buying in Central London was just a daydream.' Seeing friends hop on the ladder piled on the pressure. 'Jeremy and I came across friends who were in a similar situation who had suddenly got on the ladder and that gave us a glimmer of hope. But then we'd discover that they had inherited money or had received a huge bonus.' Although they could have bought in the commuter belt, for Angela, buying her first home represented a commitment to the city life she loved as much as a wise financial decision.
'We could have bought something,' she admits, 'but we would have had to move so far out. It may make financial sense, but we want the bars and clubs of central London.' So rather than settling for second best, in August 2003, Angela turned to her parents living in New Zealand for help.
'Within two weeks they found a property in Papamoa, in the Bay of Plenty on the North Island. It had three bedrooms, was near the beach and fitted our budget of less than [pounds sterling]75,000.' Does being on the other side of the world from her property concern Angela? 'A little,' she admits. 'There is the worry that if our tenant leaves we will have to find someone, and if something really went wrong we would have to fly over.' But despite the stresses of owning abroad, for all three buyers the benefits are clear. 'I don't panic about the UK housing market any more,' says Clare, whose home has risen in value by [pounds sterling]68,000 over the past three years.
'Having my money in property, I can just rest easier.' And Angela, despite buying a property she might never see, loves being an owner. 'When we heard the value had risen by [pounds sterling]26,000 we felt fantastic. The reassurance is also knowing our money is in bricks and mortar.' But putting psychology aside, were their investments sound? Nic Barnes, an associate responsible for international residential research with Knight Frank, believes growth in the New Zealand and French property markets is set to continue, at least in the short term.
He says: 'New Zealand house prices have moved north substantially over the past five years, up 13.5 per cent in 2004, according to the Real Estate Institute of New Zealand.
But the real advantage to New Zealand is that there is no capital gains tax, so you can reap the double gain of rental income and untouched capital gains.
'Now average house price growth in France tops even Spain,' he adds, quoting the Royal Institute of Chartered Surveyors' figure of 15.5 per cent growth in 2004, 'and I think growth will continue to be good for the next few years.'
But, he warns: 'The double-digit growth is not realistically sustainable in the long term, as we've seen here in the UK.' So his tip for a sound investment abroad? 'Be boring. Many people go on holiday, fall in love with an area and want to buy. But you must make sure your property is accessible, near good infrastructure and that there is a strong rental demand. And don't forget tax and currency angles, which can spoil an otherwise good buy.' But whatever condition the market is in, Patricia Fervier, from property company A Place In France, is certain the Brits' obsession with France is far from over. 'The British love affair with buying abroad is not going to go away anytime soon,' she says.
'It has become part of your culture.' . You can rent Clare and Kai's property via email: villafrancis@aol.com
OVERSEAS INVESTMENTS
Want to buy abroad without blowing the budget? Property investment experts and directors of property club Ready 2 Rent (www.ready-2-rent.co.uk) Alise and Jonty Crossick have picked five property hotspots around the globe - and five properties under [pounds sterling]100,000 which might suit first-time buyers willing to take up the challenge of an overseas purchase.
BULGARIA [pounds sterling]30,805 Studio flat, Sunny Beach, Black Sea.
Get in before Bulgaria enters the EU in 2008. Ready to rent; www.ready-2-rent.co.uk, 01273 609267.
HUNGARY [pounds sterling]62,653 One bedroom, Szinyei House development, Budapest. Hungary has seen capital growth of 40 per cent. Ready-2-rent, as before.
CZECH REP. [pounds sterling]73,186 One-bedroom flat, Jagellonska, Zizkov, Prague. TEHS, www.realestateprague-agents.com, 00 420 257 328 281.
DUBAI [pounds sterling]88,000 One-bedroom apartment,Time Place. Price rises look set to continue. Dubai Property Link, www.dubai propertylink.
com, 020 7258 7722.
CROATIA [pounds sterling]100,000 Two-bedroom house,Mali Drvenik, Dalmatian Islands. Prices a long way off pre-war levels. Croatiansun, www.croatiansun.com.
