Buying property in up and coming holiday hot spots is a sure fire way to make a large amount of profit when it comes to property investment. Chances are that house prices are currently still reasonably priced in the area but once more and more people buy homes and holiday there, house prices are going to shoot up. This means that those who were lucky enough to get in there before the prices increased are going to make a significant amount of money out of their investment.

It is not hard to see why Europe is such a popular destination for those looking into property investment. The most popular choices such as Cyprus, Italy and Spain all enjoy warm climates throughout the year, are significantly cheaper than the UK and offer plenty to do in the form of entertainment. This is further fuelled by the fact that flights within Europe seem to be getting cheaper and cheaper as more budget airlines fight to compete with each other. This means that anyone with property abroad doesn’t have to spend an absolute fortune in air travel going back and forth.

The problem lies in the historic nature of mortgage lending which varies considerably in the US from the standard model used across Europe. In the US it is commonplace to take out a mortgage with a twenty-five year fixed rate at the time of purchase, rather than rely on the fluctuating standard variable rate mortgage that is more commonplace in the UK and across Europe.

Maybe the European Union is too diverse an economy and it is this, that is holding back the E.C.B. from action. It has always been asserted that the lack of mobility of labour in the E.U. could be a source of keeping the economies of the members on different inflationary paths, making it difficult for the central bank to act decisively on interest rate policy when by doing so, one members economy may benefit to the detriment of another. By doing nothing however, the ECB stand the risk of pushing the property sectors in many countries into decline. It can already be seen in markets such as Spain, where any fresh impetus from overseas buyers due to recent falls in property prices, has been extinguished by the strengthening Euro against the pound. As British buyers make up over 65% of this holiday property market, the nullification of any price adjustments has dampened what was already a pretty ‘wet’market.