In the December 2008 Issue of Property Investor News
The New EU: Hungary & Slovenia
In the last issue of PIN, we looked at which residential property markets have given the best return-on-investment (ROI) to property investors, had they bought a property in each of the 10 countries that joined the EU in 2004. With emphasis given to what loan-to-values (LTV's) have been available in each country since 2004, how each currency has performed since 2004 and obviously, how each property market has performed during the four year period, the clear winners were Poland, the Baltic States, Czech Republic and Slovakia. All of these destinations are likely to have given investors a gross ROI (before purchasing and selling costs, repairs and voids etc) in excess of 400% in just four years.
Lithuania, Malta and Cyprus should have returned 200-300% on average, but way down at the bottom of the ROI table came Hungary and Slovenia, both returning less than 100% over the four year period, something that most property investors would usually (excluding the current market!) find unsatisfactory when investing in the UK property market. For example, if you obtain an 80% LTV mortgage it would equate to less than 5% property price growth per year.
In this article we will look at why the returns have been so low in these two countries, what the current state of their economies and property markets are, and what we can expect from them over the following four years. In the current global market many property investor's are perhaps more comfortable investing in a property market that has hardly grown in recent years compared to one that has doubled or tripled in value in such a small timeframe and therefore has the potential to fall substantially in value.
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