Forget Mongolia, Vietnam and Albania. When it comes to buying overseas property this year, most people will probably head for familiar favourites such as France, Spain or the Caribbean.

This flight to quality coincides with signs of problems in almost all the world’s property markets, as the euphoria of recent years is swept away by the credit crunch.

“Nowhere is immune,” says Nick Barnes, head of international research at the estate agency Knight Frank. “The shock waves are spreading, and different economies are being hit to different degrees.”

Another pitfall for those buying flats and houses off plan is the number of developers that are failing – with disastrous consequences for those who have entrusted them with their money. “Big names have been tumbling in all sorts of places,” says John Howell, senior partner in the International Law Partnership and a veteran of the foreign-property scene. Some “guaranteed” rental schemes could also prove to be less than copper-bottomed, he warns.

Spain

Even those who have avoided the various scams detailed in the story above have, in most cases, seen the value of their homes fall over the past year. The latest official Spanish figures put the annual drop at just 3%, but this seems a significant understatement. The glut of unsold homes in coastal areas, where most Britons own property, is growing larger by the day, further depressing prices. Even so, thanks to its climate, relaxed lifestyle and proximity to home, Spain is still a favourite with British buyers: the Foreign Office estimates that 1m Britons live in the country permanently. Choose carefully and now could be the time to grab a bargain.

France

After years of steady growth, the French property market has also turned. Laforêt Immobilier, a leading estate agency with more than 870 offices around the country, estimates that prices fell by 10% last year, with the £120,000-£250,000 sector especially badly hit. With the economic climate worsening, most commentators expect further drops of 8%-10% this year. There are, however, strong regional variations. While there are reports of distress sales in the Dordogne and other areas dominated by British owners, falls are more modest in Paris and on the Côte d’Azur – especially at the top end of the market.

The Alps

’Tis the season for ski property and, thanks in part to early heavy snow-falls, agents report that business appears to be holding up surprisingly well. Although Switzerland remains popular, especially with high-end buyers, Austria is emerging as a popular budget alternative.

Eastern Europe

Property prices surged during the first half of the decade, driven largely by rising local incomes and an explosion in the fledgling mortgage markets. Several markets rose too far and too fast, however, and prices in Estonia and Latvia have dropped by more than 20% in the past 12 months. Overbuilding has also led to a glut of properties on Bulgaria’s Black Sea coast and in its ski resorts, with many foreign buyers trying to offload new-build flats at steep discounts.

Countries such as Slovakia, which adopted the euro on Thursday, have held up better, although there are signs that developers are offering discounts to shift stock. The Czech Republic remains a success story: Knight Frank estimates prices rose by 25.1% in the year to the end of September, although such growth looks unsustainable.

America

The collapse in the market here has been well documented, with prices in Florida, a favourite with British buyers, tumbling by as much as 40% from their peaks in some cases. Some believe the market is near the bottom, and the vultures are beginning to swoop. For British-based buyers, much depends on the exchange rate. Those who bought when the pound hit $2 are sitting on potential profits.

Dubai

Until recently, the capital of bling looked set to buck the global downturn. Those days now seem over. The market is looking distinctly wobbly, amid signs of oversupply, tightening of credit and the first repossessions. The property analyst Colliers International says prices, which rose by a blistering 80% in the year to the end of September, are likely to have fallen slightly in the past three months.

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