Many UK buyers have paid cash but I would guess that for every one that has there will be two that have released equity from their UK property to fund the deposit. Many will be effectively 100% mortgaged. With prices now falling in Spain, the US and Ireland and with reports of similar in other fly to buy to specu/invest markets that we have rushed into, its going to be a disaster for many over the coming years (24,000 brits own in Florida with prices down up to 44% in 2 short years). For example in Bulgaria price never actually went up ‘only the prices to new mugs off the plane’. I have no doubt you’ll be able to buy ‘2 bed ski/beach apartments’ sold in some Bulgarian resorts for discounts of up to 50% on the prices paid over the last few years.
You can hardly blame the commissioned sales people for telling buyers what they want to hear. The responsibility for instructing independent legal advisors who are competent and straight, and backing off the veracity of all vested interested parties claims, sits firmly with the buyer/investor.
Having seen hundreds of apparently switched on Brits ‘leave their brains on the plane’ in Florida loose tens and in many cases hundreds of thousands of pounds, I have great fears for many other markets including Dubai and North Africa.
The credit squeeze that is now just getting underway was well and truly telegraphed a few years ago. The correction in global property markets and especially those ‘polluted’ by ‘rich’ western buyers pushing prices to levels unsustainable by local (and now global fundamentals) will be massive.
Be in no doubt property in the UK will correct back towards the mean and prices that are sustainable by fundamentals. When that starts (as it is) the newbie BTL brigade will start to head for an ever smaller exit. In the last 4 years or so many people I know have canibalised equity out of their main (and in many cases BTL) properties, because they thought having to much equity and not enough gearing was dead money. That’s fine in rising market but now many are going to learn some basic lessons in market economics.