The market for additional homes: a decade of change

The credit-fuelled boom of the 2000s saw a rapid expansion in the market for additional homes. Buyers sought capital appreciation as some properties experienced double digit annual price growth.

The credit crunch and the Global Financial Crisis (GFC) of 2007/8 rapidly changed all that. Buyers retreated and only the equity-rich were active in the core, prime second homes markets.

In countries such as Spain and cities like Miami, where the housing markets had been fuelled by overseas buyers and characterised by rapid building, these markets experienced painful contraction and rapidly falling values.

But recent years have once again seen a shift in fortunes. Every major global economy is now expanding. Buyers are back in most international second homes markets. This time, they are seeking income in a low yield environment, and finding that short-let residential property and holiday homes can provide it.

Globally, international tourist arrivals grew by 7% in 2017 to reach a record 1.3 billion. The Mediterranean outperformed all other global regions with tourist growth of 13%. This rise in tourism coincides with the growth of the sharing economy, and the rapid expansion of online marketplaces for short-term rental accommodation.

This means a broader, and rapidly changing, demand base for short-lets. It provides additional impetus for those who wish to own second homes or homes abroad.

The investor landscape is evolving too. 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. Partly as a consequence of this, along with enabling technology, occupancy rates in additional residential properties are higher than they used to be.

About the survey

In February and March 2018, Savills World Research surveyed 4,300 property owners who let their properties on HomeAway in seven major markets (US, UK, France, Spain, Italy, Netherlands and Portugal).

A second survey was carried out of 7,700 renters planning their next trip on HomeAway, from the same seven countries. Where applicable, we have benchmarked these findings against the last Savills / HomeAway survey, conducted in 2011.