In just one generation we have gone from fantasising about a fortnight’s sun, sand and sangria in a hotel or self-catering apartment to lusting after the apartment itself.

Would-be buyers looking for a holiday house are spoilt for choice. Budget aside, however, a decision on a second home rests on personal preference: mountains versus seaside, France versus Florida, modern development against ancient stone cottage. If the property goes up in value, great. If it goes nowhere, think of the holidays! But a growing number of people are primarily looking for investment opportunities. This particular buyer is busy researching off-plan property deals in Morocco one day, ski apartments in Bulgaria the next, and beach villas in Cape Verde the day after, trying to locate the hot new market ahead of the crowd. No amount of sun will make up for what they are seeking: a substantial return on their investment.

There are enough success stories around to convince many people that making money abroad is easily within their grasp. And with volatile equity markets making pension provisions uncertain, many buyers fervently believe that property — anywhere — is inherently safer.

In response to spiralling demand, estate agents routinely market overseas properties not as holiday homes but as lucrative financial investments. Promises of high rental returns and spectacular capital growth pepper the advertisements, while remortgaging deals and new financial products — one Spanish company was recently offering 150 per cent mortgages — encourage people to go into debt. The market has grown phenomenally fast.

Perhaps too fast.

Industry insiders are beginning to question whether this growth is sustainable; one adviser is holding a seminar next week under the title: “Is the overseas property bubble about to burst?” Whether he is being prophetic or merely provocative remains to be seen, but the fact that the industry is raising the issue at all is troubling. If some markets turn out to be bubbles, many people will be sitting on properties worth less than they paid.

Buyers may well feel that they were mis-sold but, in this highly unregulated market there is little chance of redress.

Unlike the personal finance market, where — after dozens of scandals — products can be sold only by trained, qualified and regulated advisers, anyone can sell property abroad. In personal finance, advisers are bound by law to assess your investment needs and how much risk buyers can absorb. In property, estate agents are not troubled by any such requirements.

Anyone can complain and seek compensation for suspected mis-selling of financial investments through the ombudsman. There is no such avenue for overseas property buyers.

However, a new trade body has been established to reassure the consumer, to stamp out bad practice and put in place procedures for resolving disputes.

Since setting up in April, the Association of International Property Professionals (AIPP) has already forced a number of member companies to withdraw misleading claims and inaccurate investment projections. A self-regulatory body, it offers an arbitration service and has already intervened on behalf of consumers on several occasions.

Paul Owen, its chief executive, says: “I think the overseas property industry is at a really key stage. It has massive potential but there are some real dangers — namely that people not doing their job properly will damage what is essentially a fundamentally sound market.”

All AIPP member agents must go through industry training and abide by a code of conduct. That requires member agents to give people time for reflection, not to demand onerous “reservation fees” and to recommend fully independent solicitors.

Owen is also keen to see consumers take more steps to protect themselves. “Why do people take so many more risks abroad than they would do at home?” he asks. His key message to amateur investors is to keep asking Why? “Why would someone rent this? Why would someone pay 35 per cent more in five years’ time to buy it? Only when all the Whys have been satisfied should someone consider buying.”

Most importantly, consumers must decide if they can weather the risk of investing overseas. Remortgaging the house to buy abroad is a risky strategy. Relying on rental income is also a high-risk strategy.

Growing competition, changing tastes, and unforeseen events like, say, terrorist attacks, can change investment outcomes radically. Whatever projections agents give are, in the end, only guesses. Investors should not be put off buying overseas property, but they must arm themselves with all the facts and look at the worst possible outcome.

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