LONDON, Sept. 17, 2018 /PRNewswire/ -- The international market for second homes has changed significantly over the past ten years, with buyers now prioritising rental income over the luxury of buying exclusively for their own use, according to a major new survey* from real estate adviser Savills and HomeAway(TM), a global expert in holiday rentals.
Back in the 1970s, nine out of ten owners kept their second homes to themselves. Even as recently as the year 2000, eight out of ten owners never rented out their properties commercially. After a period of rapid change, now more than two-thirds of owners rent out their second homes for at least part of the year in order to cover part or all of their costs.
Many buyers are now motivated by the potential for profit and the number of owners holding properties purely as rental assets has risen sharply over recent years. Back in the early 2000s, only 14 per cent of additional homes were bought purely for renting out and not for personal use. By the time of the credit crunch, this figure had risen to 19 per cent, now more than a third of all additional homes are bought as solely rental properties.
For the first time, owners' primary motivation for ownership is rental returns, which has overtaken holiday usage as the primary driver for a second home purchase.
"In a low interest rate environment investors are seeking out income generating assets," says Paul Tostevin, associate director, Savills world research. "Today's second home buyers want properties to work for them financially and they're increasingly looking not just to cover costs but to turn a profit."
The credit-fuelled boom of the early 2000s and rapidly expanding tourist industry-triggered rapid growth in the market for additional homes across Europe and the US. Low cost airlines opened up new locations overseas, with British buyers particularly active overseas.
When the global financial crisis hit, national housing markets contracted and demand for second homes fell. Growth has resumed in recent years, but the sector looks very different.
Not only are buyers much more aware of the potential for income, the profile of rental demand has changed. Online marketplaces for short-term rental accommodation have made it much easier for owners to rent out their properties and opened up the market beyond the traditional holiday demand.
"Over the past 10 years, the online travel industry has changed significantly. Staying in a holiday home has transformed, moving from an alternative way to travel to a preferred way to stay," comments Christophe Pingard, Vice President EMEA, HomeAway. "With the rise in the popularity of the category, holiday rentals are not only attracting more, but, most significantly, a new group of younger travellers or millennials. These rental travellers are willing to invest in their trips, although the price is still an important factor when choosing their holiday accommodation, particularly as they are travelling more often. That's one of the factors that make staying in a holiday home so attractive: it makes seeing the world more affordable for everyone."
"Global tourism continues to grow, with international tourist arrivals up by seven per cent last year to a record 1.3 billion.() At the same time, the rapid expansion of online holiday home platforms, such as HomeAway, opens up the market to new target groups and makes it much easier for owners to make their properties income-producing" says Tostevin.
Post-credit crunch, the market retreated to prime, established locations, led by wealthy, capital-rich individuals with little or no reliance on borrowing. The easing of credit conditions and low interest rate environment, has opened the market up again and demand for smaller, cheaper properties has grown since 2013.
. As per UNWTO 2017 International Tourism Results: http://media.unwto.org/press-release/2018-01-15/2017-international-tourism-results-highest-seven-years
Based on the survey* sample, the average price of a property purchased last year stood at £215,000, 37 per cent down on a decade ago. Just over a third (34 per cent) of properties bought were flats, up from a quarter, reflecting the changing nature of the second homes lettings market.
A third of all owners cover costs with rental income, and another third make a profit. The average gross yield across the sample stands at 6.4 per cent, or 3.9 per cent after costs, but excludes taxes.
British second home buyers shop more widely than all other nationalities represented in the survey*, with only 24 per cent of second homes located in the UK. France accounts for 19 per cent of properties owned and Spain 16 per cent, while the top three location choices by international owners are The Algarve (5 per cent), Costa del Sol (4 per cent) and Costa Blanca (4per cent).
Similarly, only a quarter of Dutch-owned second homes are located in The Netherlands. Across all other nationalities represented in the survey a majority own second homes in their own country. A very clear majority of French (86 per cent) and American (85 per cent) owners favour their home turf.
Florida is top of the list for American owners, accounting for 14 per cent of second homes, followed by California (7 per cent) and North Carolina (4 per cent).
The Spanish, Italian and Portuguese - all countries favoured by holidaymakers - strongly favour their own countries, with less than 5 per cent of their additional homes bought overseas.
The whole report to download is available here: https://www.savills.co.uk/research_articles/229130/264370-0 [https://www.savills.co.uk/research_articles/229130/264370-0]
*The Savills/HomeAway survey was carried out in February and March 2018. Savills World Research surveyed 4,300 property owners who list their properties on HomeAway's sites across Europe, North America and the rest of the world.
Notes to Editors:
For more information on Savills go to http://www.savills.co.uk [https://urldefense.proofpoint.com/v2/url?u=http-3A__www.savills.co.uk&d=DwMGaQ&c=tmh68fGhvYqZefO02qmwIQ&r=dVtILDBIVe5QzhtWyyOa2yQ8rNkikWpFaW0-PFdj4fg&m=dC3xpoJHkIKu5TSMtHtJ4ns3FcvRZ_gYHi01IkMHaJ8&s=DqElV8xoC58wSAZY796JqARul7HYw4w7HDbxhNSeAYo&e=].
For more information on HomeAway go to http://www.HomeAway.co.uk [http://www.homeaway.co.uk/]
© 2018 HomeAway. All rights reserved. HomeAway and the HomeAway logo are trademarks or registered trademarks of HomeAway. All other trademarks are property of their respective owners.
Logo - https://mma.prnewswire.com/media/744896/HomeAway_Logo.jpg [https://mma.prnewswire.com/media/744896/HomeAway_Logo.jpg] Logo - https://mma.prnewswire.com/media/744895/Savills_Logo.jpg [https://mma.prnewswire.com/media/744895/Savills_Logo.jpg]
CONTACT: Sue Laming, Savills Press Office, +44(0)20-7016-3802, firstname.lastname@example.org; Yvonne Bonanati, HomeAway, +44(0)20-3513-0748, email@example.com
Web site: http://www.homeaway.com/