Buying a home in Orlando, Florida, gives investors most value for money, according to HSBC Bank’s first overseas property report.
A typical £125,000 budget will buy a four-bedroom house with garden and a private pool in Florida – but just a studio apartment in Switzerland.
The bank says Florida’s property market has bottomed out since the peak in 2006, with prices starting to rise again.
Overseas buyers can still find bargain relatively large homes cheaply, boosted by a favourable exchange rate and low purchase taxes and fees.
The Pound to Euro exchange rate has increased the most over the past six months, giving buyers with a £125,000 budget €8,563 more to spend.
This will gives investors in places like Spain, Cyprus and Portugal more spending power, especially as purchase taxes are comparatively low. Costa Blanca, Spain, offers the most square footage per pound in Europe.
Bank spokesman James Yerkess, said: “There is a huge discrepancy in the size of property that UK buyers can purchase on the same budget in some of the most popular overseas locations for second homes.
“This is a combined result of foreign exchange rates, tax levels and the strength of the property market.”
Property prices and taxes
Some key points for overseas property investors from the report include:
- A £125,000 budget gives buyers in Switzerland £120,424 to spend after tax (3.8%) and those in Orlando £119,048 (5% tax), while those in Italy will have only £110,619 after tax (13%).
- A £400,000 budget will give Swiss property purchasers £385,356 to spend on the property and those in Orlando £380,952.
- The Swiss Alps offer the poorest purchase power; £125,000 will only buy a one-bed studio apartment and £400,000 will only stretch to a three-bed chalet despite the relatively low purchase taxes and fees.
- Costa Blanca offers most space for money in Europe. While taxes and fees amount to 10%, the property market experienced a fresh slump in 2012. £125,000 will buy a three-bed house with a shared pool.
- Purchase taxes and fees are highest in Italy at approximately 13%, leaving only £110,619 of a £125,000 budget to spend on the property. However, Tuscany places seventh out of ten on the purchase power chart.
- Post-purchase costs are least expensive in Turkey and Cyprus, where there is no annual tax on property. Foreign home owners in Cyprus are also not subject to tax on rental income, while those in Turkey face a 15% charge.
- Annual property tax is most expensive in Switzerland, where homeowners face the highest yearly charge at 2.3% of property value.
- Switzerland also has the highest tax on rental income for foreign owners at 49%, followed by the USA at 30%.
“Orlando, for example, offers excellent purchase power right now, but European destinations vary and aspiring buyers who are more flexible on location should weigh up their options to secure the most space and best facilities for their money,” said Yerkess.