Cheap flights, expensive property

Nic Cicutti, MSN Special Correspondent, argues that low cost airlines are fuelling rises in property prices:

Everywhere a Brit goes, expect a house and rental price boom to follow – even abroad. That, at least, appears to be the impression given by a succession of statistics published in the past year or so. The latest, by Savills, a UK estate agent and rental firm which acts on behalf of overseas property owners, has found that second homes abroad which are located near airports served by low-cost airlines are nearly 40% more valuable than others.

The survey questioned 12,000 owners of overseas property and found that the average price of a property located within 10 miles of an airport served by a low-cost airline is 39% higher than those near an airport without a low-cost airline carrier. Prices fell as the distance from the airport increased - there was only a 2% difference in the average price of properties situated over 80 miles from an airport. The survey also found that properties served by low-cost airlines also had higher average rents than those without. The additional rent was as much as 30% for properties within 10-20 miles of airports.

At one level, the figures quoted above are hardly contentious. They back research earlier last year by a foreign currency exchange firm, which found that homes in south west France near Bergerac Airport – a popular Ryanair and Flybe destination - had risen by 157% since 2001. Nor should we be too surprised by what we are seeing: a quick trawl through the web shows scores of overseas property websites all trumpeting the desirability of buying homes in a range of increasingly exotic and distant destinations. The key attraction, it is emphasized again and again, is the availability of cheap regular flights from the UK, offering the potential for significant rental yield and capital appreciation as a result. But of course, figures like this also raise a series of potential questions..

There is a long-running myth that the availability of low-cost flights has somehow democratised the cost of taking a holiday abroad. Instead of just the rich few being able to head off into the sun more than once a year, now that fares start as low as 99p (plus airport taxes) we can all afford to go. As with all these myths, this is highly beguiling – but equally untrue. The most recent statistics on airport use from the Civil Aviation Authority (CAA), published in November last year, show that it is the wealthy and not the poor who are benefitting from cheap air travel...

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