Almost a quarter of a million Britons have bought homes abroad in the past decade, doubling the holiday home ownership numbers and with the majority buying properties as an investment.
Those investments though may prove to be at risk as thousands of euros are wiped off the value of homes; particularly in the Mediterranean. In Cadiz, in south-west Spain, prices have dropped by 15 per cent and in Alicante, on the Costa Blanca, prices have fallen by two per cent in the past three months.
One of the reason is that Europe has suffered even more severe interest rate rises than Britain, making property increasingly unaffordable, especially in Spain, where most mortgages are variable rate loans.
Only weeks ago the Valencian property developer Llanera collapsed, with £520 million of debts, hit by the credit crunch and higher borrowing costs. It also suffered from the oversupply of properties in Spain, which has an estimated 300,000 flats lying empty after a construction boom.
In the meantime the Valencian Government is urging local councils in Almoradi and Los Montesinos to convert millions of square metres of rural to urban land in preparation for building.
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