Budget Airlines & Holiday Property Prices in Europe
The rise of the budget 'low-cost' airlines opened up huge opportunities for Europeans to travel around the continent very economically. The availability of cheap flights also helped fuel the holiday properties market considerably over the last few years. But the credit crisis has since taken its toll on the market. |
In the early part of this decade, the number of destinations served by low-cost airlines increased dramatically. Those living in northern Europe had countless choices for short breaks and holidays and many took the plunge by investing in a second property.
This phenomenon was most marked in the UK and Ireland where house prices rose massively from the mid 1990s until the mid 2000s. Many UK homeowners took equity out of their existing homes by re-mortgaging to buy that dream holiday appartment or villa in the sun - mostly in France, Spain, Portugal and Italy.
Tens of thousands invested in a holiday home abroad to take advantage of lower property prices and lower mortgage rates which were then available in continental Europe.
Cheap Flights meant Easy Access
One of the key considerations was to get cheap and convenient access to their property. Was the holiday home town or city served by a low-cost airline? This offered the chance to visit the property multiple times during the year at an affordable rate. In the old days one was faced with a very long drive or having to pay up big time for an airline ticket on one of the major carriers.
The phenomenon was so marked that whenever a budget airline started a new route real estate prices increased soon after as a flood of property seekers entered the market.
The budget carriers such as Ryanair and Easyjet were (and remain) very well established in Spain, France and Italy - the traditional holiday centres. New airlines entered the market and routes were set up to the Baltic states, Morocco, Turkey, Croatia and Bulgaria which brought the property speculators further afield. For a while price rises were very good and everyone congratulated themselves.
Future Uncertainty - the Credit Crunch
Things then started to change. Oil prices rose which put the airlines under huge cost pressure. The credit crisis emerged and the pound devalued significantly. This caused a major correction in the holiday property market, with Spain being very badly hit after years of over-development. Some budget airlines began pulling out of certain routes giving many property owners headaches. While oil prices came back down the airline industry faces severe pressure. At this point the future remains uncertain for many property investors.
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