Market News : Second home owners feeling the pinch, survey reveals
Some 65% of second home owners are considering or would like to sell their property, according to a new survey by holiday rentals company HomeAway.
When the firm quizzed owners in February 2012, almost 60% also confirmed that their property had taken a nose dive in value since they purchased it and 37% were feeling the squeeze, saying it was a bigger financial burden of late.
The vast majority bought their properties in the last six years following the boom in UK house prices in 2007 which resulted in a huge rise in equity that owners quickly put to good use buying a second home in the UK or abroad.
Over 90% of respondents stated they had property in Europe, with France and Spain unsurprisingly the top two countries, but 53% stayed closer to home in the UK.
Although the rise in equity helped finance these purchases, 44% of respondents still had to take out a mortgage to help fund the investment, with an average loan to value of just over 25%. Some are covering this debt with rentals; a canny 24% stated they were fully covering payments with income from holiday lets, but over 20% were paying for the property directly out of their income, pension or savings.
‘One in four British holidaymakers now opt for a private holiday rental so it seems many second home owners are still missing a trick. With our average client reporting rental income of £10,000 per year, owners feeling pressure to sell may wish to consider holiday lets,’ said Andy Cockburn, regional director of HomeAway.
He revealed that booking enquiries to HomeAway UK sites increased by 28% last year. ‘We expect growth to continue as more holidaymakers discover rentals and make the switch from hotels. Families and groups of friends are the main target as rentals provide the key facilities they need, plus a lower average cost per head,’ he explained.
The website provides over 300,000 holiday rental listings in 135 countries worldwide available to rent direct from owners and property managers.
A recent study of the European holiday rentals marketplace by PhoCusWright estimates the value of the European Union market at €19 billion in terms of annual rental revenue, with €6.2 billion generated in the UK alone.
The holiday rentals industry is one of the fastest growing sectors in the travel market today and the PhoCusWright research estimates it is the fifth largest segment in the EU travel industry, representing a significant opportunity for second home owners in the UK and abroad to profit from their homes.