Property in Hurghada

More House Price Falls

Well I have to say that my last comment about the US economy was over optimistic. Fannie and Freddie will not be enough to see the return of optimism. With Lehman Brothers gone I think we can be sure of another Bank ceasing to trade. There will be bank mergers as well and a fair bet that many of the investment Banks will end up being owned by the proper Banks - following JP Morgan Chase lead with JP Morgan merging with Chase Manhattan.

However, not so widely reported was the 10% fall in oil yesterday, its now under $100 (approx $93) and looks set to go much lower, laws of supply and demand are working.

Oil will be the catalyst for recovery

I see this oil price slide as the start of a long process of recovery. More falls will temper inflationary pressures, stimulate demand and, combined with interest rate reductions, set the US and the rest of us for recovery. My main fear is the housing market in both UK and US. Demand for houses has yet to start up again and further house price falls are most likely. Negative equity is going to be an issue, its possible there will be a million homes in UK in negative equity. This means that bankruptcies will sharply increase and further test their liquidity. Its going to be tough times

What about overseas property?

There is no doubt that overseas property demand is linked to the economy. However, in the same way people are downgrading from branded to won label goods so I am seeing people search for low prices outside traditional markets.

The reason is simply to do with price. Why pay 500,000 euros in Spain for sea view when the same thing can be had for under 80,000 euros in Hurghada Egypt? The difference is that large.  When investors think that there is no “off season” for rentals in Egypt then they start to understand that this cheap option is one which has more than just price upside.

So house prices in certain overseas markets are attractive and I predict that more people will be making the effort to search them out. Its really the same process as paying a thrird of the price for own brand beans or tomatoes. You get pretty much the same thing and save a whole load of cash.

12 Reasons - Why Hurghada?

1/ Strong economic growth in Egypt - 5.9% forecast for 2008

2/ Infrastructure good but with more investment from the government improving

3/ Lots of facilities, diving, snorkeling, windsurfing, kitesurfing, historical and cultural attractions

4/ No capital gains tax

5/ No inheritance tax of British residents

6/ Improved purchase process

7/ Warm climate with virtually no rain. Year-round tourist season

8/ Many airlines fly into Egypt and Hurghada from many countries

8/ Low cost destination and low cost of living

9/ 9.8 million Visitors to Egypt in 2007, forecast to double to 16 million visitors by 2014

10/The property market in Egypt is developing fast - low prices capital appreciation are likely

11/ 35Km of sandy beaches

12/ Developments in great locations with 5 star facilities.

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