SO what will your new year resolutions be for 2006? With the days of quick, easy winnings on UK property consigned to the history books, you may be one of the thousands of Britons putting an overseas property purchase on your list of things to accomplish for next year. The number of people searching for profit and pleasure overseas has been growing steadily and dinner party conversation has shifted from how much more we think our homes are worth to our bolt holes in the sun. Owning a property abroad used to be the preserve of a privileged few, but it has become the investment du jour. It seems everyone is at it: estate agents from Hastings to Hull display particulars of Spanish villas in their shop windows alongside three-bed semis down the road, and property websites have recorded huge growth in international searches.

Louise Walker, of the property website Primelocation, has certainly noted the gathering pace: “This year has been the biggest year so far. We have tripled, if not quadrupled, the number of agents coming on board and we are covering more countries. People are looking for opportunities beyond our shores.”

And no wonder. Liam Bailey, of Knight Frank’s research division, says: “The UK is growing by 2 to 3 per cent at the moment in terms of prices, way below most countries in Europe: France is at 14 per cent, Spain is at 13 per cent, Italy and Ireland are at 7 per cent — we are quite a low-growth market compared with other countries, and that is definitely going to influence people’s behaviour.” Predictions for UK price rises next year are not looking too sprightly either.

Anecdotal evidence (good statistical trend data is still woefully scarce for overseas markets) also points to buyers exploring “undiscovered” countries as well as new areas in established markets. Although traditional markets such as France, Spain, Italy and Portugal still account for the lion’s share of overseas property searches on Primelocation, estate agents report that more and more buyers in search of “the next big thing” are turning their interest to places such as Cape Verde, Morocco, Thailand and Turkey, where prices are still relatively low. This trend is likely to continue next year.

The fastest-growing type of overseas buyer has been the investor: from dabblers to those building sizeable portfolios in several countries. “We get an awful lot of repeat business from investors,” says Andrea Hill, of the overseas property agent Escapes2. “I have one investor who is in eight different countries at the moment; he keeps coming back to find out what is a good area to be thinking about.”

Moreover, like policemen, overseas buyers are getting younger. Savills has noted an increase in thirtysomething buyers, especially single women who cannot afford a property in the UK. Affordability is a well-documented plight for first-time buyers. This year overall house price inflation fell below wage inflation for the first time in nine years, but first-time-buyer property prices are still rising faster than wages, according to a report released this week by the Office of the Deputy Prime Minister.

However, before we all put our names down for off-plan flats here, there and everywhere, it might be wise to stand back and take stock. It is true that price increases and rental returns abroad may look better on paper, but buyers — particularly those who are relying on income to make their investment work — need to approach with caution in their step and a thick wad of research in their back pocket. Stories of people putting their life savings into a high-risk investment abroad, or first-time buyers mortgaging themselves to the hilt on an overseas buy-to-let, are far from uncommon and all too often they involve properties that remain unlet for months on end and have escalating running costs. This should sound as a warning to would-be investors.

Andrea Hill says: “You’ve got to say, ‘I have got this amount of money that I want to put down as a deposit; this is the amount of hard cash that I can get my hands on; this is how long I want to wait for a return; and this is the kind of return I am hoping for’. If you are going into an area with high returns, there is going to be a certain level of risk. Don’t spend what you can’t afford to lose.” Charles Weston Baker, of Savills’ international department, agrees. “If you are buying an investment abroad you have to be very, very cautious,” he says. “If you can see the bandwagon, you have missed it. If there is a speculation bubble where investors are running around revving each other up, the market has to be looked at very coldly. The underlying credentials have to be solid. There has to be real demand.” That applies as much to established markets as to new ones.

This is not to say that we should not be looking forward to buying overseas next year. It is just a case of making sure that on the list of new year resolutions, there is also enough room for thorough homework and plenty of good advice.

lucia.adams@thetimes.co.uk

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