Now that most of the French and Spanish property market seems over-priced and over-crowded, and last year's eastern European hotspots are beginning to look over-built and over-rated, where can the British go next in their search for a dream holiday home? Well, we've been looking, and what we do rather like are affordable island getaways in the Mediterranean.
This quiet Italian island is full of 17th-century palazzos and 18th-century farmhouses, which are ideal for people who want a restoration project as well as a second home. It's also beautiful, sharing all the attractions of mainland Italy, and yet property prices are about 20% cheaper. Better still, it is relatively undiscovered, says Tracey Harrison in The Mail on Sunday.
The most popular area to invest is in the Noto Valley, in the southeast of the island. This is a Unesco World Heritage Site, featuring several baroque towns where you can buy a small two-bedroom apartment from £40,000 or pay as much as £650,000 for land with a large restoration project. It is also reassuring that new developments tend to be small-scale and concentrated in the resort areas of Trapani and Castellammare del Golfo in the north, where new homes with pools go for around £150,000.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
But a word of warning: purchase tax for foreigners is quite high up to 20% and ancient land laws coupled with a "tortuous" planning system can delay purchases, says Harrison. So you do need to hire a Sicilian notary, as well as a British solicitor. See https://www.sicilianhomes.com/.
Just a 90-minute flight from the UK, Sardinia is the second largest island in the Mediterranean and has a fantastic climate. But its good air links mean that it is about to be invaded by budget airlines, says Ginetta Vedrickas in The Independent. Until then, Sardinia will remain "very much an island", where life revolves around the summer season. Most developments line the coastal areas, and you won't find many rustic villas or much else going on inland. In the low season (November to March), many shops and hotels simply close. So with period property thin on the ground, "if people want cheap, old homes to restore, Sardinia's not the place", Linda Travella of Kent-based estate agent Casa Travella, told Vedrickas. New developments are reasonably priced though, with studio apartments in Costa Paradiso starting at £52,000 (Savills, 020-7016 3744) and two-bedroom homes around £120,000.
As usual, waterfront property is more expensive and you pay extra for outdoor space a detached villa in the chic northern resorts, for example, starts from about £300,000. Buyers are warned that Sardinia's regional government is considering imposing an annual luxury tax on holiday homes, says Vedrickas, although most properties should fall far below the suggested minimum taxable size. Contact Casa Travella on 01322-660988; https://www.casatravella.com/.
Two of the biggest names in Spanish property development, Iberian and Atlas International, are deserting the Costa del Sol's astronomic prices and heading for new opportunities in Cyprus where, says Sarah Hartley in The Mail on Sunday, house prices are 30% lower and 20% lower than in Portugal. Aphrodite's Isle', where 70% of foreign property buyers are British, is tucked away in the south-east foot of the Mediterranean, has scorching summer temperatures and a rich cultural history that draws on both Europe and Middle Eastern influences, which is partly the result of 9,000 years of periodic invasion and occupation. One occupier was the UK, and Cyprus retains many aspects of British culture including, helpfully for would-be property buyers, a legal system modelled on the British one and the use of the English language for legal documents.
Developments are springing up between the two airports, Larnaca and Paphos, on the southern coast. Larnaca is marred by dreary Seventies high-rises, but Paphos's new developments are restricted to three storeys and, says Hartley, the coastline's beauty hasn't been ruined. One-bedroom apartments start at £57,000; three-bed villas overlooking the sea £460,000. Property is registered with The Land Registry and inheritance tax has now been abolished. Contact Leptos Estates, 020-8883 2333; https://www.leptosestates.com/.
Prices balloon in old British favourites
For anyone still wanting to invest in the old British favourites, Mallorca and Minorca, there is still a reasonable market for buyers with big budgets, says Mark Stucklin in The Sunday Times. But we would point out that prices look rather steep in comparison to our featured islands. In Mallorca, good-quality coastal flats cost around £200,000, while detached villas start at around £650,000 and balloon to as much as £7m. Minorca, on the other hand, is currently seeing a slow market for property under £700,000, although at the top end (£1m to £2m) it is "very buoyant", Colin Guanaria of Bonnin Sanso estate agency told Stucklin.
Emma is a former digital journalist with more than 15 years of experience in national news in the UK and overseas. She was an assistant editor at MoneyWeek, covering property, funds, alternative investments and the share tips pages, then Emma moved on to The Daily Telegraph, first as a personal finance reporter and then as a business reporter.
Emma also worked as a finance correspondent for Ninemsn (Australia’s Channel 9 online) in Sydney, Australia for just over a year, and since then Emma has worked at Channel 4 News as a reporter and producer, and she spent more than 4 years at BBC online. At present Emma is a senior manager for content and thought leadership at PwC.
Act now: First Direct’s £175 switching bonus ending soon
First Direct has launched a £12,500 prize draw on top of its £175 cash bonus - but they both finish soon, so you’ll need to be quick
By Vaishali Varu Published
Credit card providers slash 0% balance transfer deals
Customers face a double whammy of rising interest rates and shorter 0% balance transfer periods. We look at what’s going on in the credit card market and why you’ll need to act fast to get the top 0% balance transfer deal
By Ruth Emery Published