Holiday homes abroad lose their shine

The value of British holiday homes abroad has fallen by as much as 15 per cent in the past three months according to an investigation by The Daily Telegraph. A series of second home hot spots across the Continent has had thousands of euros wiped off the value of holiday villas, particularly those along the Mediterranean.

Almost a quarter of a million Britons have bought homes abroad in the past decade, doubling the holiday home ownership numbers and with the majority buying properties as an investment.

The average prices of a two-bedroom apartment in Majorca has fallen from £225,000 to £203,000, a three-bedroom villa in Lanzarote has dropped from £248,000 to £228,000. Prices in parts of Bulgaria, after having shot up in value by 40 per cent last year, have stagnated.

Property experts say that those who will be hardest hit are people who have invested within the past year - especially into new developments - and those who need a quick sale.

This week it emerged that the French property market has fallen in value for the first time since the 1990s, with overall house prices dropping by one per cent in the three months to September.

Last week the Valencia property developer Llanera collapsed, with £520 million of debts, hit by the credit crunch and higher borrowing costs. It also suffered from the oversupply of properties in Spain, which has an estimated 300,000 flats lying empty after a construction boom.