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The European Central Bank (ECB) has followed the Swiss National Bank (SNB) by delivering a much-needed rate cut this Thursday. Marking their first cut in five years, ECB President Christine Lagarde indicated that this could be the beginning of a series of rate cuts across the Eurozone. This move is expected to invigorate the alpine property market, which has been sluggish due to poor snowfall and high interest rates. Giles Gale, Managing Director of Alpine Property Finders, notes that many investors have been hesitant, but the rate cut could revive interest, particularly in lower altitude resorts where rental income is crucial. As mortgage rates decrease, the investment appeal of buy-to-let alpine properties in France and Austria is set to improve significantly, potentially shifting the market dynamics in favor of buyers.
The ECB followed the Swiss National Bank (SNB) and delivered a much needed rate cut Thursday.
Delivering their first cut in 5 years ECB President Christine Legarde said that there was a “strong likelihood” that the cut marked the begging of a series of rate cuts in the Eurozone.
After a slow winter with poor snowfall across the Alps the cut is expected to give a much needed boost to the alpine property market. “Many of our property investors have been sitting on the sidelines this winter as poor snowfall and high rates made it easy to sit and wait” says Giles Gale, Managing Director of Alpine Property Finders.
“While high altitude, AAA resorts in France such as Val d’Isere, Meribel and Courchevel continued to perform well, lower resorts where investors are more likely to be reliant on rental income were much quieter.” continues Gale.
In Austria local rules mean that most properties come with a rental obligation and buyers are much more focused on rental income. With rates now expected to continue their downward trend the investment proposition of these ‘buy-to-let” alpine properties is expected to greatly improve.
The ECB cut came not long after the SNB had cut its headline interest rate to 1.5%. However, the ECB cut is expected to be much more significant for the alps explains Gale:
“Mortgage rates had remained relatively low in Switzerland and most buyers there are looking for private second homes and don’t intend to rent out their properties. Conversely, buyers spending EUR 500,000 - EUR 1m in the mid-market of the French and Austrian Alps tend to be much more focused on rental income and reliant on mortgage borrowing. The rate cut will be much more significant for them and may just turn the investment case back in favour of buying that long dreamed for bolt hole in the Alps”.
