First-time buyers look abroad to raise deposit

First-time buyers priced out of the UK market could benefit from looking abroad in order to raise the deposit needed for a purchase at home.

That is according to FirstRungNow.com, which finds capital appreciation in newer markets may allow potential first-time buyers to raise the necessary funds.

"There are countries out there where property prices are growing quite considerably. This means you can increase a small deposit to a larger one a lot more easily," explained Helen Adams, managing director of FirstRungNow.

However, buyers must be careful which markets in which they invest – perhaps at the expense of more established European destinations.

"The trouble with Spain and France, and particularly Spain, is you won't get the capital growth – which is what will enable you to put a deposit down in the UK, if that's what your reason for buying is," continued Ms Adams.

"Whereas in places like Turkey and Cape Verde – less obvious places – you are more likely to get the growth that you need. But it's harder to buy there – there is always a language barrier, legal problems, and lots of things you need to take into consideration."

Eastern European destinations are also still relatively popular for this form of investment.

Research from the Fair Investment Company (FIC) found 44 per cent of respondents would consider buying their first property abroad, and eight per cent have already done so.

The main reason for doing so was the rising house prices in the UK and unavailability of finances in the UK.

However, this option is a drastic one for UK first-time buyers.

"It is one of the less popular options that people are reviewing with the current uncertainties. Because, home-based solutions like shared ownership, buying with a friend or getting your dad to help you, are more practical and perhaps less risky," explained Ms Adams.

Yet, the rewards are there for those willing to take the risks.

"The trouble with shared ownership is that it is not available to everybody, whereas buying abroad has got a wider accessibility. And, of course, the gains can be greater," concluded Ms Adams.

"There are countries out there where property prices are growing quite considerably. This means you can increase a small deposit to a larger one a lot more easily."